DENVER - The trust fund that pays unemployment benefits to Coloradans is in danger of going bust within 16 months, according to the Legislature's chief economist.
At the same time, lawmakers plan to expand benefits, which actually will bring more money into the fund from the federal government.
The recession hit the unemployment fund surprisingly fast. This year, it will have almost $700 million available for benefits. By next summer, it will have less than $50 million, according to a forecast by legislative economist Natalie Mullis and her staff.
"The fund balance will fall precariously close to insolvency by the end of (fiscal year) 2009-10, when it is expected to be $44.7 million," Mullis wrote.
Mullis blamed rapid job losses. Colorado lost more jobs in the last nine months than it did during the 18 slow months around the time of the 2001 terrorist attacks.
Some help could be on the way from the federal stimulus bill. In exchange for expanding benefits, Washington will give Colorado a $127 million infusion into its trust fund, said state Sen. Lois Tochtrop, D-Thornton.
Republican governors in South Carolina, Texas, Louisiana, Mississippi and Alabama have said they don't want the unemployment money from the stimulus bill. But Tochtrop has introduced Senate Bill 247, which tweaks the unemployment law to qualify Colorado for stimulus money.
"If we don't go after this money, we have nothing," Tochtrop said.
Tochtrop's bill expands benefits to people who leave a job to:Care for a sick family member.
Flee domestic violence.
Move because a spouse found work out of town. The bill also allows more low-wage workers to qualify for benefits, and it extends benefits for 20 weeks for people who enroll in job-training programs for high-demand occupations or the renewable-energy industry.
The extra benefits would be repealed July 1, 2012. The added benefits will cost the state $13 million a year for the next three years, said Cher Haavind, spokeswoman for the Department of Labor and Employment. But the trust fund would still come out ahead because of the $127 million payment from the federal government.
The pressure should start to lessen by the middle of 2010, as more Coloradans find jobs. The fund will slightly rebound to a $225 million balance by 2012, according to predictions from Mullis' staff.
Mullis told lawmakers Friday that's she's fairly confident in the forecast but there are "downside risks," meaning the economy could get worse than predicted.
If the fund goes bust, Colorado would have to borrow money from the federal government to pay unemployment benefits, said Mike Rose, chief of statistical programs for the Department of Labor and Employment. Several states are already insolvent, Rose said.
The fund gets its money from the federal government and a tax on employers. If the balance falls below certain points, the tax on employers goes up and a "solvency surcharge" is added. Colorado employers have been paying the surcharge since 2004, Rose said.
Still, Colorado's fund is better off than 31 other states, according to the National Center for Employment Law, which tracks the health of unemployment trust funds nationwide.
Tochtrop's bill is scheduled for its first hearing Wednesday in the Senate Business, Labor and Technology Committee.