As light hopefully begins to appear at the end of the economic damage COVID pandemic tunnel, Utah is in a solid position with its Unemployment Insurance Trust Fund. Utah businesses should celebrate since a depleted fund causes sharply higher unemployment insurance rates for employers in order to replenish it. In addition to this, there is more help available to Utah from the Federal American Rescue Plan Act (ARPA). It simply requires further action by the Legislature.
Utah has paid out an astonishing amount of unemployment benefits during the pandemic. Through September of 2021, Utah taxpayers have contributed and the state has paid approximately $777,909,903 in benefits and the federal government has added $1.3 billion. That totals to more than $2.1 billion.
To put that into perspective, other states have paid out approximately 350% of what they would typically pay in benefits during the timeframe of the pandemic, exhausting their trust funds in many cases. This requires many states to borrow from the federal government in order to continue paying benefits. Luckily, Utah has not been in that position.
State governments have paid out as much in benefits during the pandemic (1-2 years)as they did from January 1, 2001 until the pandemic began (20 years).
By federal standards, 34 state accounts are insolvent, with an estimated $114 billion needed to bring them all up to what the federal government considers minimum adequate levels.
Meanwhile, most states are able to receive their share of up to $94 billion of ARPA funds to replenish their unemployment insurance trust funds. Utah was 1 of 15 states that have requested funds from ARPA for this purpose, allocating $100 million during a recent special session.
Even with that recent infusion of $100 million, according to the Tax Foundation in Washington, D.C., Utah could access up to $375 million more under the stipulations of ARPA. Utah had about $1.15 billion in its trust fund pre-pandemic and now has approximately $780 million. ARPA allows states to replenish their funds up to pre-pandemic levels so Utah could ask for that difference: $375 million.
This would allow Utah to further replenish its fund and avoid deficiencies that would be placed on Utah employers. Even though Utah’s solvency ratio is 107%, taking down that additional revenue from the federal government appears to be a prudent move for policymakers in Utah in order to insure our fund is as healthy as possible.
Your Taxpayers Association strongly encourages the Utah Legislature to continue to use the ARPA money to ensure the Unemployment Insurance Trust Fund remains strong to avoid future increases on employers in the state.