States Running Out of Cash for Jobless Benefits

Many cut taxes, weren't prepare for down turn
By Kevin Spak,  Newser Staff
Posted Dec 15, 2008 8:40 AM CST
In this Dec. 5, 2008 file photo, a rack with forms to assist the unemployed and job seekers is seen at a New York State Department of Labor career center in Albany, NY.   (AP Photo/Mike Grol, Filel)
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(Newser) – The ranks of the unemployed reached their highest levels since 1982 last week, and about 30 states are running out of money to fund them, the New York Times reports. Some states, including Indiana and Michigan, are already borrowing heavily from the federal government to keep up with jobless benefits, and some are alarmed. “You don’t expect the loans to happen this early in a jobs slump,” says one advocate for low-wage workers. “You would expect that states should have savings.”

But many don’t, particularly those that cut unemployment taxes in good times, and now fear raising them. “Frankly, they created the perfect storm,” said an Indiana unemployment official. California, New York, Ohio, and Rhode Island are among the other states that are inching toward insolvency, says the Times. Burning through $11 million a week, South Carolina recently requested a $15 million loan. “We have never experienced anything like this,” says one official.