(The Center Square) – Job losses caused by the response to the COVID-19 drained more than 90 percent of West Virginia’s unemployment insurance fund balance, but Gov. Jim Justice still intends to provide an extra $100 to unemployment recipients each week using federal coronavirus funding.
West Virginia already is borrowing federal money to prop up its unemployment insurance fund, which declined from a balance of $191.4 million Dec. 31 to a $14.6 million in July.
The state now will use more federal money from its Coronavirus Aide, Relief and Economic Security (CARES) Act funding to pay for the extra $100 a week, which will cost the state $26 million a week. The state has about $678 million in CARES Act funding to spend.
The unemployment insurance fund lost about 92.4 percent of its balance from end the of last year to July, which was the eighth-worst drop in the nation. The average loss was around 52 percent, and only 11 states lost more than 75 percent of their balance.
President Donald Trump issued an executive order last weekend that provides unemployment recipients with an additional $300 a week in federal funding and asks the states to provide another $100 weekly. States, however, can opt to count their current unemployment payments to that $100.
During a news conference earlier this week, Justice announced his intent to provide the additional $100 a week regardless.
“I commend President Trump for [the executive order] because we’ve got to get some money flowing to our people [who don’t know how] they’re going to pay the rent, how they’re going to keep from being evicted,” Justice said during a news conference.
In previous months, the federal government had been providing $600 a week to unemployment recipients, which was fully funded with federal dollars. Garrett Ballengee, executive director of the free-market Cardinal Institute for West Virginia Policy, told The Center Square he supports the overall reduction from $600 a week to $400 a week because it makes going back to work economically more attractive.
“I believe it's also important to not simply cut the benefits from $600 to $0, so a phased down approach will allow people to plan and adjust to their new economic reality,” Ballengee said. “However, we must keep in mind that the dignity of work and earning a paycheck is the optimal state for nearly all of us. There is no doubt that the government-enforced shutdown has been brutal on people's ability to earn a paycheck, so there is a role for some short-lived, targeted relief by the government."
Ballengee said he supports West Virginia contributing to the bonus because it forces the state to have skin in the game, which will lead to better information flow to West Virginia communities about the economic realities, he said.
The bonus will be funded retroactively, which means those who have been receiving unemployment benefits will get the extra benefit tacked onto their unemployment checks dating back to the week of Aug. 2.