Colorado is likely to join 25 other states in borrowing from the federal government to continue paying unemployment benefits.
Department of Labor and Employment Executive Director Donald J. Mares made the announcement to the state’s Joint Budget Committee last week.
He said quick action is needed to address the projected shortfall in the state’s unemployment trust fund.
“Like all states, Colorado has been hit hard,” Mares said. “More people are tapping into the benefits. In November, we processed 22,222 new applicants. Just two years earlier, that monthly average was only about 11,100.”
In addition to more initial claims, hes said the people who are losing employment this year are higher wage earners and are getting higher benefit amounts.
In November 2009, about $94 million in benefits was paid from the trust fund compared with only $42 million in November 2008 and $21 million in November 2007.
While more money is going out, less revenue is coming in. “The trust fund comes from employers’ premiums and fewer and smaller companies are paying those premiums that support the fund,” Mares explained.
The Colorado unemployment trust fund balance now sits at $30 million, compared with $562 million a year ago.
Colorado’s unemployment rate has been moving downward for the last three months, and the number of residents applying for unemployment benefits in the week ending Dec. 26 decreased by 1,421, according to figures released by the U.S. Department of Labor on Thursday. The number of Coloradans relying on assistance from continued claims stood at 72,020, down from 73,782 in the previous week.
However, those are still levels of unemployment not seen since the early 1980s, the last time Colorado had to borrow from the Treasury. The unemployment trust fund was in a deficit from roughly December 1982 until April 1985, requiring the state to borrow about $222 million.