Mass. Requests Federal Credit To Cover Unemployment Benefits

BOSTON — Massachusetts has asked the federal government for a loan so that the state can continue to pay unemployment insurance to the more than 300,000 Massachusetts residents currently receiving benefits.

The request is for a line of credit from the U.S. Treasury Department to borrow up to $250 million. The funds would cover the state’s cost of unemployment benefits for February.

Just as the state asks to borrow money, Gov. Deval Patrick says he will not raise unemployment insurance taxes to make up for the shortfall. A 40 percent increase was set to take effect in April.

Michael Widmer of the Massachusetts Taxpayers Association says freezing the rate will not cure the problem of the state’s very high cost of unemployment insurance.

“Freezing the rate for 2010 is a stopgap action,” Widmer said. “It doesn’t address this underlying problem, the cost of unemployment insurance for Massachusetts employers.”

Widmer says the state is not getting any advantage from paying higher benefits for a longer period of time than other states.

Jim Klocke, of the Greater Boston Chamber of Commerce, says that it is unexceptional for Massachusetts to join two dozen other states that are borrowing money to pay benefits.

“This type of borrowing is an expected reasonable step that helps states manage short-term cash flow issues in their unemployment insurance trust fund,” Klocke said.

ProPublica.org: Chart shows path to insolvency for state’s unemployment reserves.