Bullock directs CARES Act revenue into state’s dwindling unemployment trust fund
Looking to prevent a spike in taxes paid by Montana businesses into the state's unemployment trust fund, Gov. Steve Bullock on Wednesday said he will infuse the account with $200 million in CARES Act funding.
While fewer than 18,000 state residents received unemployment benefits last week, Bullock said more than 100,000 workers have received benefits over the course of the pandemic.
As a result, he said, the state's Unemployment Insurance Trust Fund has taken a hit.
“Over the last eight months, the trust fund has dipped from $365 million in March to $202 million at the end of September,” he said. “This action will keep us from borrowing funds from the federal government to shore up our state's trust fund.”
The trust fund is supported by a tax levied upon thousands of Montana businesses to ensure their employees receive benefits if they're laid off. The amount a business pays is determined each year based upon several factors, including the trust fund's balance each fall and its ratio to previous years.
Because the fund has dipped significantly, and after several years of record low unemployment in Montana, the new tax rate set to begin on Oct. 31 would have left most Montana businesses facing a rate increase of at least 85%, Bullock said.
“Business have already been hit hard once due to COVID-19,” he said. “The last thing we want is to see them hit hard twice, impacting their bottom line for years to come. That's why I'm dedicating $200 million in COVID relief funds to boost the trust fund immediately.”
Infusing the fund with $200 million will bring the account to nearly $400 million. Bullock said it will ensure that workers continue to receive benefits without overwhelming Montana businesses.
“This infusion will effectively double Montana's unemployed trust fund, and it will prevent over 43,000 businesses from being hit by a significant spike in rates while also ensuring labor and industry can keep paying benefits to those in need,” he said. “The department will not have to raise rates on participating business in 2021 or in subsequent years.”
Bullock said individual businesses may still see changes in their contribution rates based upon other factors. But the rates will be minor compared to the rate that would have occurred without the transfer of funding.
“After the Great Recession, it took rates approximately eight years to return to the rates prior to that economic meltdown,” Bullock said. “We're not going to let that happen in Montana. This will have a real impact on the ground for businesses next year and for years to come, and it will play a significant role in our state's economic recovery.”
As of September, 13 states had used CARES Act funding to backfill their Unemployment Insurance Trust Fund. At the same time, 19 states are already borrowing from the U.S. Treasury to pay claims while two other states have advance authorization to begin borrowing, according to state officials.
Shortly after Bullock's press call on Wednesday, staffers from Sen. Steve Daines office said funding distributed by the governor into the trust fund came from legislation passed by Congress.
Bullock and Daines are campaigning for the Senate seat.
"Senator Daines was instrumental in securing this funding for Montana and getting the CARES Act signed into law," said Daines' spokesperson Kaite Schoettler. "You may also recall that over the summer, Senate Republicans tried numerous times to pass a clean extension of the extra federal unemployment insurance benefits to continue negotiations and come to a compromise overall, and Chuck Schumer blocked it."