Gov. Ducey taps federal cash to boost unemployment fund

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Arizona Gov. Doug Ducey signs a bill.

PHOENIX - Arizona Gov. Doug Ducey on July 12 tapped into a pot of emergency federal cash to refill the state unemployment insurance trust fund, bringing it above the level it was before the pandemic hit in March 2020 and nearly erased the fund’s balance.

The move by the Republican governor is designed to prevent insurance premiums paid by businesses from soaring. And it came on the same week that an extra $300 per week in pay for unemployed workers will stop under a Ducey order designed to force people to return to work.

The governor deposited $759 million from the $4.8 billion Arizona received from the Biden administration’s American Rescue Plan into the trust fund. It is the first time the governor has used any of the money appropriated by Congress in March.

Along with an earlier deposit of $76 million from previous federal coronavirus relief money, $62 million in state money approved by the Legislature and a rebound in the fund as employers paid premiums, it now has a nearly $1.2 billion balance.

The fund had dropped from $1.1 billion before the pandemic hit to below $90 million in February.

"Small businesses are the backbone of Arizona’s booming economy, and we’re committed to protecting them from a tax increase," Ducey said in a statement. "They create jobs and support our communities, and it’s crucial that we don’t let massive tax hikes run them out of business."

Employer premiums currently run about $160 per year per employee but could increase if the trust fund dropped below zero and the state had to borrow from the federal government. The fund builds up during good economic times and drops during periods of high unemployment, with federal cash making sure benefits continue if it is exhausted.

Ducey announced in May that he would be ending the extra $300 a week in federal unemployment payments starting this week, join a joining a large number of Republican-led states that decided to end the program amid complaints from employers that they were having a hard time persuading people to come to work.

Economists say there are various reasons why some people are not returning to work, including fear of the virus, lack of child care and for some, the added unemployment pay.

But at $540 a week with the current $300 federal supplement, an unemployed Arizona worker is only getting $1.35 above the state’s minimum wage of $12.15 per hour.

Arizona’s standard weekly unemployment pay is just $240 a week, lower than all but Mississippi. At $240 per week, the unemployed will be getting $6 per hour.

The Legislature and governor agreed to boost that to $320 a week as part of the state budget deal reached last month, but those don’t kick in until next year.

There are now about 28,000 Arizonans getting regular unemployment benefits, along with about 115,000 getting payments for previous work in the gig economy or being self-employed, according to statistics from the Department of Economic Security. Those people normally do not qualify.

Early in 2020, the number of unemployed was about 11,000. New weekly claims hit 181,000 in May 2020 and are now below 2,000 a week.