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COVID-19 Coverage

Arizona Governor Addresses State's Unemployment Benefits

Stuart Kinlough/Getty Images/Ikon Images

By Howard Fischer
Capitol Media Services

CHANDLER -- Gov. Doug Ducey has no plans to use state resources to make up for the fact that more than 430,000 Arizonans will see their jobless benefits cut by more than half within weeks.
"It's on Congress,'' the governor said Thursday when asked about the rapidly depleting federal account which is providing unemployed Arizonans with an extra $300 a week.

Michael Wisehart, the director of the state Department of Economic Security, said a week ago that this could be the last week for the extra payments. And he said when the end comes it will be sudden, with no advance warning.

That will leave Arizonans who have lost their jobs through no fault of their own -- some due to Ducey's policies shuttering or curtailing certain businesses -- with a maximum of $240 a week.
On one hand, the governor said the state does have "money in the bank.''
"We have been financially responsible,'' Ducey said. But he called questions by Capitol Media Services about the state filling in some, if not all, of the lost benefits "hypothetical.
The answer, he said, is congressional action.
And if that doesn't happen? Ducey's message to unemployed Arizonans was simple.
"Plan ahead,'' the governor said.

He also brushed aside questions of whether he could live on $240 a week if there is no deal.
"This is on Congress,'' Ducey said.
Separately the governor said the fact that President Trump admitted to journalist Bob Woodward that he publicly downplayed the risk of COVID-19 in February did not affect the state's response to the virus.

"There has been a sense of urgency and seriousness about this since Day 1,'' Ducey said. That includes  activating the state's Health Emergency Operations Center in January to track suspected and confirmed cases and his declaration of emergency in March.
And the governor said he trusts Trump and the administration.

"Trust is built through experience and actions,'' Ducey said. "And on every ask that the state of Arizona has had, either to the president or the administration, they have delivered.''
In fact it was an executive action by Trump that allocated $44 million in August to provide the extra $300 a week in benefits after Congress failed to reach an agreement about continuing the $600 weekly bonus. Ducey put Arizona's share of that at $725 million.

Only thing is, there's no indication there's more federal cash to be had absent congressional action. And Wisehart said that money is running out.

The Republican-controlled Senate on Thursday did consider a bill with funds for $300 supplemental benefits. But it is considered dead on arrival because Democrats wants $600 payments, hazard pay for essential workers and a second round of stimulus checks.
Arizona does have the money.

Aides to the governor said Ducey has set aside $400 million in cash from the federal Coronavirus Aid, Relief and Economic Security Act, some of that money he acknowledged he did not divide up among Arizona cities, towns and counties.

Ducey, however, has some other ideas about how he wants to spend those dollars. That includes providing some financial relief for businesses who are facing higher unemployment taxes by the end of the year.

From Ducey's perspective, that leaves only the possibility of federal action to keep benefits from shrinking.

He credited Trump with providing that additional cash infusion with keeping additional jobless aid flowing after the first efforts in Washington to reach a deal failed.

"And what did Congress do?'' Ducey said. "They went on recess.''
Lawmakers are back in Washington.

"There's time for them to act,'' the governor said. "They should act.''
There is the separate question of the financial stability trust fund, the special account that provides the source of dollars for the state's $240-a-week benefits.

Before the pandemic there was more than $1.1 billion in the fund, all of it financed by a tax paid by employers on the first $7,000 of each worker's salary.

By the end of June it was down to $812 million. On Aug. 22 it had gone to $484 million.
And as of Sept. 5 there was less than $358 million available, with those dollars disappearing at the rate of $50 million more a week paid out in benefits than is being taken in from employers.

But, unlike the question of additional federal aid, the trust fund becoming insolvent would not mean that Arizonans would lose even that last $240 in benefits. Instead, the state would have to borrow the money from the U.S. Department of Labor.

Those dollars, however, would have to be paid back with higher taxes on employers, which is why Ducey is looking at using some of the CARES cash to replenish the trust fund.
That, however, is likely only a stopgap solution.

There are indications the situation is not getting better. The 430,000 Arizonans now collecting benefits compares with just 371,100 for the week ending Aug. 8.

The weakest sector remains leisure and hospitality jobs, particularly among bars and restaurants. The governor has shuttered the former entirely unless they change their mode of operation and agree to restrictions. And while restaurants can open they are limited to 50% capacity.