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Asking states to chip in to cover 25% of the enhanced unemployment benefits at a time they are facing significant budget shortfalls is “laughable,” said New York Gov. Andrew Cuomo.
Governors and unemployment experts panned the executive order President Trump signed over the weekend to reinstate some supplemental unemployment benefits as an impractical policy that will take too long to implement and require broke states to contribute money they don’t have.
Under the order, unemployed workers would receive $400 a week in federal benefits on top of the usual state-paid benefits. The federal government would fund $300 for the additional payment and the state would be required to cover the remaining $100.
But states are hemorrhaging money from the economic downturn fueled by the coronavirus pandemic, and local leaders are asking for additional federal assistance so they can shore up revenue declines and continue to provide essential services.
New York Gov. Andrew Cuomo, a Democrat who chairs the National Governors Association, called the request for states to chip in for the extra benefits “laughable.” Under Trump’s proposal, he said it would cost New York $4 billion to pay the 25% portion of unemployment at the same time the state is facing a $30 billion budget hole.
“That's handing the drowning man an anchor,” Cuomo said Monday.
In California, Gov. Gavin Newsom estimated the cost to the state would be at least $700 million per week. While states could use CARES Act funding to pay their share of the benefits under Trump’s order, Newsom said the state has already allocated 75% of the $15 billion it received.
Under the order, states are required to pay the matching portion of the unemployment insurance costs in order to receive any federal funding, meaning workers in states that are unable to pay the match would get no federal benefits. But Trump said Monday morning that he was looking at a way to be flexible with states so those that were unable to contribute could still receive federal benefits.
“They'll make an application, we'll look at it, and we'll make a decision,” he said. “So, it maybe they'll pay nothing in some instances.”
Many governors were still reviewing the policy Monday, but least one state had agreed to a proposal that would provide only a $300-a-week benefit. In Ohio, Gov. Mike DeWine, who like Trump is a Republican, has expressed skepticism over the state’s ability to afford its portion of the benefit. On Monday, state officials said Ohio had agreed to a deal under which it would forgo the $400-a-week payments and only provide the $300-a-week federal portion of the payments.
Out-of-work Americans had been receiving $600-a-week in federal benefits since March under the CARES Act, the coronavirus relief bill passed by Congress. Those benefits expired at the end of July but with congressional lawmakers unable to come to an agreement on a broader coronavirus aid package, Trump acted unilaterally this weekend to approve a series of executive orders he envisioned as a way to maneuver around Congress.
For their part, congressional Democrats condemned the executive orders signed by Trump on Saturday as meaningless overreach, with House Speaker Nancy Pelosi calling them "absurdly unconstitutional."
Questions also remain about how long the extra federal unemployment benefits could last. Only Congress is allowed to authorize spending, so Trump’s order relies on repurposing $44 billion from FEMA’s Disaster Relief Fund to pay the benefits.
The Federal Pandemic Unemployment Compensation program has paid out $247 billion since March, and at that rate the $44 billion will not last long, said Rebecca Dixon, executive director of the National Employment Law Project.
“Even with a reduced federal cost of $300 per claimant per week, this amount will be exhausted within a few weeks of states even getting a system up and running to pay it,” she said.
On a call with reporters Monday, Kentucky Gov. Andy Beshear said if the federal benefits ran out in several weeks that could leave states on the hook to pay the full $400-a-week amount—something that would likely cost his state more than $1.5 billion.
Lawmakers and experts also said that Trump’s orders would essentially require states to get a new system up and running to pay out the benefits, a difficult proposition as many states have struggled even to provide regular benefits to people who qualify.
“States cannot use their current Unemployment Insurance infrastructure to pay a benefit that is not authorized by Congress,” Dixon said, adding that states will have to set up a new way to add these payments to existing benefits. “The language in the memorandum says that these benefits must be paid ‘in conjunction with the state’s unemployment insurance system’ which means that states will have to set up a new way to add these payments to existing benefits.”
Beshear, a Democrat, said setting up a new system could “take weeks to months that our people don't have.”
The new parameters and requirements of the program would require benefits to be restricted to people who receive at least $100 a week and would require certification that a recipient was out of work due to the pandemic—something Newsom said would “create time delays and enormous consternation for millions of those who would seek those benefits.”
Andrea Noble is a staff correspondent with Route Fifty.