Kentucky’s Governor, Steve Beshear, is calling for a special session of the state’s Legislature. The move is prompted by Senate President David Williams, who says that the session is needed to find a solution for the state’s looming unemployment insurance problem. While the state has done well this fiscal year – puling in $121 million in surplus – there have been problems with the unemployment benefits budget. If lawmakers cannot fix the problem with the state’s unemployment insurance program, it could lose out on $640 million in federal tax credits.
Given that the unemployment insurance benefits are comprised of contributions from employers, losing any government aid could mean that these benefits will go unpaid. Thus far, little has been done to rectify the issues with the program. Indeed, the state has borrowed $900 million from the federal government to keep the system afloat after its money reserves ran dry a few years ago. Though the state currently enjoys a budget surplus of $121 million, none of that money can be used saved for making interest payments on the federal loan.
According to official records, the tax credits afforded state employers accounts for $377 per employee. More than 1.6 million people hold jobs which offer unemployment insurance. Senator Alice Forgy Kerr of Lexington has criticized the Beshear administration for not acting when it had a chance to rectify a $20 million shortfall that is the root of the problem.