The Arizona Department of Economic Security warned last week that the unemployment benefits fund will run dry by March without a $600 million loan from the federal government due to unprecedented demand from jobless workers.
Gov. Jan Brewer is expected to apply for a loan from the U.S. Treasury Department in December or January. As of mid-October, 22 states had borrowed a total of more than $19 billion to pay unemployment benefits.
Officials said the unemployment trust fund balance has been going down by about $75 million a month for the past 14 months. The trust fund balance hit a high of $1 billion in June 2008, but has since shrunk to $327 million.
Arizona has lost 268,000 jobs since December 2007.
The federal program provides zero-interest loans to states for unemployment benefits if the money is repaid by the end of 2010. Federal regulations require states to pay benefits even when their unemployment trust fund is depleted.
Currently some 145,000 jobless Arizonans are receiving a maximum of $240 a week, the second-lowest weekly maximum in the United States.
Officials said replenishing the trust fund will require an increase in the state’s unemployment-insurance taxes. The rate is currently 1.34% on the first $7,000 of an employee’s wages, but could go to 1.9%.
Companies will receive notice in January of the required rate hike.
Arizona’s Department of Economic Security said the state could have to borrow more money to replenish the unemployment trust fund in 2011.