Rising unemployment in the territory has led to an increase in unemployment claims, forcing the territory to borrow from the federal government to pay beneficiaries, Labor Commissioner Albert Bryan Jr. told the Senate Finance Committee during budget hearings Monday.
Last year the Bureau of Labor Statistics reported unemployment at 8 percent, with the island of St. Croix leading at 9.2 percent, Bryan said. As of July, BLS reports a "dramatic increase" to 9.2 percent territory-wide, with St. Croix again hurting the most at 10.5 percent. "This has resulted in the need to continue to borrow federal funds to pay unemployment beneficiaries," Bryan said.
Labor has borrowed $23 million so far and continues to borrow up to $1.5 million per month. Interest on the borrowing has exceeded $500,000 and continues to grow, he said.
“We expect to see increased numbers of unemployment claims as the discretionary spending in the economy contracts and private employers lay off more employees," Bryan said. We expect that by September, we will be borrowing $1.5 million per month to satisfy claims."
Nationwide, unemployment trust funds owe more than $41 billion and almost a billion dollars in interest, he said.
Since 2008, Labor has distributed almost $100 million in unemployment benefits. There are three tiers of unemployment insurance the department is processing manually.
“This has been a gargantuan task for my Unemployment Insurance team,” Bryan said.
Workers Compensation has been similarly busy, he said. "Last fiscal year we manually processed over 6,000 cases that resulted in over $8 million in payments for wages and medical expenses," he said.
Overall, the department is straining under budget cuts, he said. "We are extremely short staffed and are literally struggling to provide the services we are mandated to provide the people of this territory who often look to us for relief,” Bryan said.
Bryan was before the Senate Finance Committee to discuss Labor’s budget appropriation request of $7.8 million, with $5.5 million from the General Fund and $2.3 million from the Government Insurance Fund. Labor’s total nonappropriated local 2012 funds are projected to be $1.3 million and anticipates another $9.4 million in federal funds, Bryan said, for a total 2012 budget of $17.2 million.
Salaries and wages account for $3 million or 55 percent of the General Fund appropriation. Health insurance, retirement and other benefits account for another $915,000 or 16 percent of the General Fund budget. Of the federal funding, $3.8 million is earmarked for salaries and $1.2 million for benefits.
No votes were taken at the information-gathering hearing.
Committee members present were Sens. Carlton "Ital" Dowe (chairman), Nereida "Nellie" Rivera- O’Reilly, Janette Millin-Young and Louis Hill. Absent were Sens. Shawn-Michael Malone and Celestino White Sr.
