CHARLESTON, W.Va. – The House of Delegates on Tuesday unanimously passed a bill to supplement the state’s Unemployment Compensation Fund, which is projected to become insolvent later this month due to the state’s high unemployment situation.
The House passed Senate Bill 558 by a 98-0 vote Tuesday morning. The bill allows the state to use up to $50 million in a bridge loan from the state’s Rainy Day Fund to shore up the account when its balance is projected to be less than $50 million at any time over a 30-day period.
“We’ve heard throughout the session of the persistently high number of layoffs in our coal industry,” said Finance Committee Chairman Eric Nelson, R-Kanawha. “These layoffs have led to a dramatic escalation in the decline in our Unemployment Compensation Fund balance. This bill will open up a line of credit to continue paying these benefits until hopefully our employment situation turns around.”
Any funds borrowed from the Rainy Day Fund must be repaid within 180 days. The bill allows the funds to be withdrawn anytime from its effective date through Sept. 1, 2017.
A similar bill was passed following the 2009 recession to allow up to $20 million in loans from the Rainy Day Fund. The alternative from borrowing from the Rainy Day Fund would be obtaining a loan from the federal government, which would have to be paid back with interest and potential additional penalties that would have to be passed on to employers.
“Borrowing from the federal government would be a bad option for the state, because the interest payments on that loan would lead to higher Unemployment Compensation surcharges for state employers – something they desperately do not need right now,” Nelson said.
“This bill is an unfortunate result of President Obama’s War on Coal,” said House Speaker Tim Armstead, R-Kanawha. “Commerce Department officials have told us the state’s unemployment situation is incredibly dire now. This is why we’ve taken bold steps in several areas to help make West Virginia more attractive to job creators, in hopes to turning around our economy.”
The bill was made effective from passage. It now goes to Gov. Earl Ray Tomblin for his signature.