Unemployment insurance is in dire straits in Nevada as the state continues to borrow money from the government to keep its unemployment benefits afloat. The situation is so severe that the benefit fund is not expected to recover until 2018. Reports suggest that the problem shows no sign of abatement as Nevada continues to experience jumps in its unemployment rate since November, 2010.
The Employment Security Council raised unemployment tax on business by .77% in 2010, bringing the tax rate to 2% in an effort to offset the deficit. While it will help, Nevada has accrued millions in loans from the federal government and the tax will be hard pressed to account for the debt.
Projections that the fund will be in the red until 2018 are founded on the current 2% tax rate. However, Governor Brian Sandoval wants to return rates back to their 2010 low. This would push the projection of loan repayment further into the future and has drawn the ire of critics as the federal government has announced that states must begin paying interest on their loans.
Nevada must make its first payment against its loan, plus interest, in September. The governor states in a press briefing that $60 million would be allocated to cover the cost. That money, however, will be coming from the general fund and leave even less money for health care.
Currently, the state owes the government a total of $645 million. Nevada will have to make cuts to many of its programs and may fall behind on setting up its federally mandated health insurance exchange program.