In addition to a huge budget revenue shortfall, state lawmakers may also have to address how to replace funds in the state unemployment trust fund that is quickly burning through its available cash.
That is the highest amount paid out since 2010 – and more than half of the total amount paid in 2009 ($2.5 billion) – and paying at this rate, the trust fund could become insolvent in less than two months. To replenish it would take three times the amount of money currently in the state budget stabilization account.
As of November, the state trust fund balance was $4.8 billion, with roughly $1 billion in both unemployment claims and revenue.
Washington Policy Center Small Business Director Mark Harmsworth estimates the current balance before the COVID-19 outbreak was around $4.1 billion. The state trust fund is replenished by employer contributions that, based on agency projections, is approximately $80 million a month.
However, Harmsworth said “that’s assuming they’re (employers) all operating—which they’re not.”
Either way, it leaves the trust fund with roughly $3 billion right now. However, ESD reports that out of the 787,533 distinct individuals who have filed for unemployment insurance, only 504,284 have received benefits.
At the current rate of benefits paid, Harmsworth estimates the fund has 45 days before it goes dry, adding: “I’m being really, really generous there.”
According to the Tax Foundation, Washington’s trust fund ranks 23rd for solvency and is capable of paying benefits for only 11 weeks. The report notes that Washington’s unemployment claims represent roughly 19 percent of the total civilian workforce.
If the trust fund goes empty, Harmsworth said Governor Jay Inslee and the state legislature can replenish some of the money from the rainy-day , which currently only has approximately $1.6 billion. Or, they can take money from the general fund, which is already expected to experience an enormous shortfall in anticipated revenue that could be filled by the rainy day fund.
State Treasurer Duane Davidson has previously noted the relatively small amount of money in the emergency fund compared to the overall operating budget and has against using money for nonemergency operating expenditures.
ESD has not responded to a request for comment.