State to pay $62.6 million interest on federal loan for jobless benefits

CARSON CITY - State officials agreed Tuesday to pay $62.6 million to the U.S. Department of Labor to cover interests payments on the $690 million loan made to Nevada to cover unemployment benefits.

With little discussion, the state Board of Examiners agreed to the payment. The state must pay $22.55 million by June 30 and the rest during the fiscal year that begins July 1. Funds were included in the state budget approved last year by the Legislature.

Starting in September 2009, the state Division of Employment Security began borrowing funds from the federal government when Nevada unemployment rolls skyrocketed and the agency ran out of employer-paid taxes to cover state unemployment benefits.

Last year the agency estimated the debt would rise to $861 million by this Sept. 30. But it has not reached that total because of a slightly improving economy and fewer people on unemployment. State unemployment taxes were raised on employers last year. The federal government also has increased the unemployment taxes it collects from Nevada employers.

All states combined as of June 1 owed the federal government $28 billion for loans they received to cover unemployment benefits.

Nevada's unemployment rate was 11.7 percent in April, down from a peak of 14 percent in October 2010. The number of unemployed residents now is 158,600, down from 193,600 at the peak period.

The Employment Security Division reported recently that tax revenue from employers to cover unemployment benefits has shown a moderate increase.

Gov. Brian Sandoval and Secretary of State Ross Miller serve on the Board of Examiners. Attorney General Catherine Cortez Masto also is a member, but was absent Tuesday.

Contact reporter Ed Vogel at evogel@reviewjournal.com or 775-687-3901.