As Unemployment Claims Mount, Massachusetts Fund Dwindles

BOSTON — The $484 billion relief package President Donald Trump signed Friday contains money for small businesses, hospitals and testing, but no money for state governments to replenish depleted unemployment funds.

That's bad news for Massachusetts, where 689,088 workers have filed for first-time unemployment benefits since the week ended March 21. At the current rate, Massachusetts would run out of unemployment money by mid-May and be forced to borrow from the federal government.

Any money Massachusetts borrows would have to be repaid within two years, further complicating an already messy state budget process.

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On Thursday, the Pioneer Institute released a report that put the state's unemployment rate at 20.4 percent, up from 2.8 percent five weeks ago when the economic fallout from the new coronavirus started. The report said the actual number is likely much higher as many laid-off workers are not eligible for unemployment insurance.

The first federal government stimulus package included $600 extra per week in unemployment assistance, but states are still taking on most of the costs. On Thursday, the New York Times reported that the extra $600 had the smallest impact for laid off and furloughed workers filing unemployment claims in Massachusetts.

"Most state trust funds are underfunded for this crisis," Jared Walczak, the director of state tax policy at the Tax Foundation, told the newspaper. "It’s hard not to be. The magnitude of this crisis meant that very few states were prepared."

"Many states are already reporting precipitous declines in revenues that fund state services in health care, education, public safety, transportation and other vital programs," the National Governors Association said in a letter to congressional leaders this week. "States and local governments need robust support from the federal government as we navigate the response to this pandemic and to help foster the economic recovery that is ahead."

But that support may not be coming. Senate Majority Leader Mitch McConnell said he is reluctant to send more money to states, fearing they may use them for purposes not related to the coronavirus response. In a press release Wednesday, McConnell's office said the Senator opposed "Blue State Bailouts" and suggested states should consider filing for bankruptcy.

More Coronavirus Coverage On Massachusetts Patch:

• Local Budgets In Limbo Until State, Feds Act
• Coronavirus Case Counts For Every Massachusetts Town
• 80,000 New Unemployment Claims In Latest Report
• When Will MA Relax Coronavirus Social Distancing Measures?

Dave Copeland writes for Patch and can be reached at dave.copeland@patch.com or by calling 617-433-7851. Follow him on Twitter (@CopeWrites) and Facebook (/copewrites).