PHOENIX — Gov. Doug Ducey accepted a federal offer of an extra $300 a week in unemployment benefits for more than 370,000 Arizonans out of work to replace the $600 payments that expired July 31.
The aid could start flowing within days, the Governor’s Office said Friday. The extra money is retroactive to Aug. 1. That means eligible Arizonans would be paid next week not only for that week but for the two weeks they missed.
But Ducey won’t add another $100 a week, which the Trump administration invited states to provide, although the Governor’s Office acknowledged he has money available to do so.
All Arizona will provide is the regular state unemployment benefit, which is capped at $240 a week, a figure Ducey has shown no interest in adjusting. And that is paid for not by the state but by a tax on employers based on how often they lay off workers.
Ducey had the option of boosting the additional aid by the $100 a week, to $400, using money left over from the $1.9 billion the federal government has given Arizona as part of the Coronavirus Aid, Relief and Economic Security Act, his chief of staff, Daniel Scarpinato, acknowledged.
Scarpinato estimated the price tag would be something in excess of $40 million a week.
The governor decided instead, Scarpinato said, to replenish the trust fund that fuels the regular state jobless benefit — that $240 a week — to keep taxes from going up on the businesses that fund it.
Estimated 5 weeks’ worth of payments
The extra federal payment for unemployed people won’t last long.
The money is coming out of the Disaster Relief Fund. But President Trump has limited that withdrawal to about $44 billion, an amount that is estimated to provide five weeks of payments.
Scarpinato acknowledged the limited duration. But he said it provides time to break the stalemate in Congress that allowed the $600 additional benefits to expire.
“That’s why it’s so important for Congress to do something,” he said. “They need to work together. They need to do their job and get this done.”
Talks broke down after Democrats in Congress demanded the full amount. Republicans countered with $200 a week, followed by some figure tied to what people were earning before.
Ducey plans to help employers
The state trust fund involved in paying unemployment benefits is fueled by a tax paid by employers on the first $7,000 of each worker’s salary.
The presumptive rate for new employers is 2% of that, or $140 a year. But the actual rate over time varies from 0.05% to 12.85%, depending on how often companies fire or lay off workers without cause.
Arizona’s double-digit unemployment rate during the pandemic has taken the fund from $1.12 billion in March to $580 million as of Aug. 8, the most recent figure available.
At this rate, the fund would run out of money in November or December.
But benefits would continue, with the state borrowing the needed money from the federal government. That is what happened during the last recession, when the fund went $420 million in debt.
That, in turn, required employers to pay a surcharge to pay it off, however. Scarpinato said that’s something the governor wants to avoid this time around.
“Most businesses in Arizona are small businesses,” he said. “They’ve been hit very hard. We want to do everything we can to avoid raising taxes during this pandemic.
“The state has to protect the social safety net on an ongoing, long-term basis.”
Only Mississippi pays less in unemployment benefits
On paper, unemployment compensation is supposed to provide one-half of what someone was earning before being fired or laid off.
But Arizona lawmakers have capped payments at $240 a week, a figure not adjusted since 2004. Only Mississippi pays less.
Scarpinato acknowledged calls to raise the cap, specifically citing a proposal by the Grand Canyon Institute to boost it to $490 a week — half the average state wage — with automatic adjustments after that.
But he sidestepped repeated questions of whether Ducey would be willing to consider that at some point.
