Nevada officials seeking big loans

CARSON CITY -- State officials have applied for up to $264 million in federal loans to meet Nevada's obligations for unemployment benefits through the end of the year.

In a letter sent last week to the U.S. Department of Labor, Nevada officials ask for up to $48 million in October, $120 million in November and $96 million in December.

The move came three weeks before the state's Employment Securities Council is scheduled to convene for a discussion about the tax employers pay to finance the unemployment trust fund that covers jobless workers' benefits.

The council will meet Oct. 6 to talk about setting the 2010 unemployment tax rate. The current rate averages 1.33 percent on the first $26,600 of a worker's wages.

Council members will hear testimony from economists regarding a solvency test to pinpoint how much money the trust fund will need to cover benefits and repay federal loans. Economists will give the council several tax-rate scenarios that account for interest costs, loan repayment and strategies for rebuilding the fund's reserves.

The council will issue its decision in November.

Officials said Nevada could need more than $1 billion to get through 2010 if the economy doesn't make a dramatic turnaround.

Twenty other states plus the U.S. Virgin Islands are receiving federal loans to cover unemployment insurance claims during the recession.

Nevada's jobless rate reached a record 12.5 percent in July, the third highest in the nation. Joblessness in Las Vegas is at 13.1 percent. August figures are expected to be released Friday.

The unemployment trust fund ended 2008 with $750 million on hand to cover unemployment benefits.

That stash had plummeted to $70 million by August, when the state was paying out $38 million a week in benefits.

Cindy Jones, administrator of the state's Employment Security Division, said in December that officials didn't want to raise unemployment taxes on businesses in the middle of a recession.

The last time the tax increased was in 2005, when it rose 7 percent from 1.29 percent to 1.38 percent. It fell to its current rate of 1.33 percent in 2008.

Review-Journal writer Jennifer Robison contributed to this report.