A day ahead of the launch of the new legislative session Wednesday and as jobless numbers mount, the Common Sense Institute released an analysis of Colorado’s Unemployment Insurance Trust Fund on Tuesday.
“The bottom line – the news is not good,” said Chris Brown, the institute's policy and research director.
Before the COVID-19 outbreak last winter, the trust fund had $1.1 billion in the bank, but by November it had dwindled by $1.2 billion — meaning it had fallen $114.35 million in the red, and that deficit could sink to more than a billion dollars by the beginning of the next state government fiscal year that begins in July, according to the analysis.
For the fund to recover to its pre-pandemic solvency by 2028, employers' taxes and contributions will have to grow by an average of $420 million a year after 2023, the Common Sense Institute projects.
Brown said Colorado is among the states with the most challenging budget issues, citing record-high unemployment levels related to COVID-19 pandemic shutdowns.
“The more the fund continues to deplete, the more Colorado’s unemployment insurance program must tap into Federal funding,” Brown stated. “Colorado now ranks in the top 10 states in the greatest amount of federal loan money outstanding in both absolute and population-adjusted dollars.”
The Common Sense analysis addresses how the state’s reliance on federal funding "will create an uphill battle for economic recovery during a time when employment numbers and the economy continues to turn for the worse."
As of last week, Colorado, was one of 17 states relying on federal dollars — with the ninth-highest amount of federal loan money outstanding, both in total and population-adjusted dollars.
Read the full report by clicking here.
“The impact of the UI Trust Fund status cannot be understated," Brown said. "The repercussions of these numbers will have significant and adverse affect on the state economy for many years.”