The Texas Workforce Commission expects confirmation this week that it will receive a requested $160 million interest-free loan from the U.S. Department of Labor to replenish its depleted unemployment compensation trust fund.
The once-healthy fund, which is supported by a tax on employers, is being drained by mounting claims from an increasing number of laid-off Texans. It is required to hold at least $857 million, but at the beginning of June it had less than $620 million.
The loan will keep the fund solvent through July. The state will make similar requests each month through October.
The TWC estimated it would require loans totaling $493 million.
The commission voted in May to seek the federal loans, which must be repaid by December 2010. They will be repaid with proceeds from a combination of taxable and tax-free bonds. The seven- to 10-year bonds would be supported by a portion of the employment tax paid by businesses in the state.
In 2003, the Texas Public Finance Authority issued $1.37 billion of bonds to replenish the TWC trust fund. The 2003 issue consisted of $776.7 million of fixed-rate revenue bonds, including $256.2 million of tax-exempt debt and $520.5 million of taxable bonds, and $600 million of taxable variable-rate demand revenue bonds.
The 2003 bonds were rated AA by Standard & Poor’s, AA-minus by Fitch Ratings, and Aa2 by Moody’s Investors Service.
