State Takes Out $1.3 Billion Loan To Pay Unemployed Texans
Texas has taken out $1.3 billion in federal loans in a single month to prop up its overwhelmed unemployment system. The most recent Texas data for unemployment placed it north of 13%.
That number isn’t going down significantly anytime soon as Texas reclosed bars and the state struggles to keep up with new COVID-19 infections, hospitalizations and deaths.
About 1.3 million people across the country applied for unemployment last week, a decline of nearly 100,000 from the prior week. State numbers will be released later this month.
Texas ran out of money in its Unemployment Insurance Trust Fund on June 9. Money in the Trust comes from employers taxed per employee.
The weekly pay out exceeding, at times, $350 million quickly burned through the nearly $2 billion in had stashed away. Last week that figure was $293 million, a weekly figure higher than any month in 2019.
Now it and eight other states have taken nearly $10 billion in federal loans or what are called Title XII advances to cover the gap.
Texas has been approved for $6.4 billion through august if necessary. That is nearly double what the state took out in Title XII loans during the Great Recession.
The loans are interest free through the end of the year and then will rise to what would be 2.4%
$16 billion has been paid out by Texas and the federal government for unemployment. The federal government is scheduled to end an additional $600 per week for people affected by Coronavirus on July 25.
The state will likely have to raise unemployment taxes on employers as a result of the advances.
The $3.8 billion received by the state and distributed to Texans during the Great Recession took several years to pay back.