Alabama leaders weigh out funding options for new $400 federal unemployment benefit

MONTGOMERY, Ala. – Over the weekend, the president signed four executive actions aimed at economic relief. Although his constitutional authority is being questioned by members of congress.

One of the actions cuts enhanced unemployment benefits from 600 dollars a week to 400. President Trump is asking states to pitch in one fourth, or $100, of that money. And right now, Alabama is considering whether it can afford to contribute.

President Trump’s recent decision to require states to pay out a portion of the unemployment benefit, is going to cost Alabama nearly $400 million according to Senator Arthur Orr, Chair of the Senate Budget Committee.

“Can we come up with that kind of money to pull down three federal dollars for every one state dollars or 25% match requirement? Right now we don’t have the money in the bank,” the senator said.

Orr said about $630 million have been paid out in state unemployment benefits this year. Currently there is only $200 million left in the unemployment compensation trust fund.

Governor Ivey’s office sent WHNT News 19 a statement on the matter:

“As we continue working to get Alabamians safely back to work, we are exploring the options we have available to provide the necessary assistance. The governor along with the Department of Labor are closely evaluating the most recent directions now.”

Office of Governor Kay Ivey

Orr said one option is to utilize a portion of federal CARES Act money.

“But that’s going to cost. If we do this, businesses are going to pay more in taxes which is certainly a concern because who ultimately pays that? The consumer,” he explained. “The people, they pass it on to the consumer, so the people wind up paying that tax. That’s a tough issue.”

Orr said businesses are already experiencing tax increases on a sliding scale, which are being used to replenish the unemployment trust fund.

However, if state leaders can’t agree on a way to generate the complete amount for the unemployment benefit, Orr said they may not need to worry.

“President Trump did say for those states that didn’t have sufficient funding in their state trust fund that he would consider waiving the 25% match,” the senator added. “If that occurs, then it’s probably a no brainer for Governor Ivey.”

He said he can’t comment on the likelihood of the state being equipped to comply with the executive order. But ultimately, things will be left up to the governor’s discretion.