According to an article in the Star-Telegram, Texas’ unemployment compensation trust fund may fall short $447 million by Oct. 1, because of the temporary suspension of the unemployment replenishment tax last year. Although the unemployment replenishment tax was reinstated this month, it won’t be enough to reach the $861 million required by Texas law.
The article said:
As a result of the deficit, the Texas Workforce Commission must consider raising the tax or issuing bonds to meet the shortfall or wait to see whether the state could use an interest-free federal loan, said commission Chairman Tom Pauken, a Perry appointee who took office after the tax was suspended by the commission last year…”We will have the money to pay for the claims,” he said. “Here would be my concern: You don’t want to raise taxes substantially on employers at a time when it’s really tough to keep the doors open and keep people employed.”
I don’t want to be the one to send off the WARNING SIRENS; but I wouldn’t count on this fund being able to pay ALL of the jobless claims if current economic conditions persist and/or get worse. Also, the unemployment compensation fund is running towards a deficit and the number of unemployed continues to rise.
Like all insurance, the unemployment insurance is setup to only handle unemployment claims up to a certain point. What happens when we pass that unemployment threshold and we have an unemployment compensation trust fund deficit?