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Loans for unemployment put Nevada over $300 million in debt

By ThisIsReno
Published: Last Updated on

By Phillip Moyer, Nevada News Bureau: Nevada has borrowed a total of $331 million to pay for unemployment benefits as of March 31, according to Cynthia Jones, administrator of Nevada’s Employment Security Division. The loans have been taken out in order to deal with the swelling numbers of unemployed Nevadans during the current financial crisis.

Recently released statistics from the Department of Employment, Training, and Rehabilitation show that Nevada’s unemployment rate rose to 13.2 percent this February. There were 3,500 more jobs in February than there were in January, but the labor force increased by 5,700 people.

Jones said Nevada currently has no plans for how to pay back the loans, nor any estimate for when paying back the loans will be possible. The borrowed money is subject to a 4.9 percent annual interest rate, though the American Recovery and Reinvestment Act of 2009 waived the interest for 2010.

Currently, Nevada will need to pay its first interest payment — $60 million — in fall 2011, though Jones expressed hopes that the federal government will extend the interest-free period for all states that have borrowed money to pay the unemployment benefits. She is not aware of any current plans by Congress to waive the interest, nor any portion of the loans, however.

Jones has no estimate for how much total interest Nevada will accrue on the loans.
The U.S. Department of Labor has estimated that 40 states will need to borrow a total of $90 billion to pay for unemployment benefits by 2011.