Trump’s order to extend unemployment benefits could cost Colorado $31.1 million a week — money it doesn’t have

For Coloradans on unemployment, don’t expect the extra $400 to show up in weekly payments just yet. The state is seeking more guidance on how to move forward with President Donald Trump’s weekend executive order to tap federal and state funds after a federal unemployment supplement ran out July 25.

Trump’s order, which critics say he has no authority to do because it breaches congressional spending authority, wants states to pay $100 of each weekly claim, which means Colorado must figure out where that money will come from. Based on nearly 311,000 Coloradans still receiving unemployment benefits at the end of July, that’s an extra $31.1 million the state must find each week to fund Trump’s order. 

“We don’t have the money, obviously,” said state Sen. Dominick Moreno, a Commerce City Democrat and state budget writer.

And to move ahead with any change in the payment, the state’s unemployment office must readjust its computer system to handle the alterations.

“Until we get more guidance from (U.S. Department of Labor) we are not able to provide additional information on implementation timelines or retroactive payments,” said Cher Haavind, deputy director of the Colorado Department of Labor and Employment. “We hear that guidance may come in the next couple of days.”

The coronavirus’ blow to the economy has resulted in 679,255 Coloradans making an unemployment claim since March, when restaurants, bars and other businesses minimized operations as state-mandated safety measures were enacted. 

As of July 25, approximately 310,912 Coloradans were receiving some type of unemployment benefits. Most are paid out of the state’s unemployment trust fund but about a quarter are self-employed or gig workers and are paid from federal money.

But for both groups of workers, everyone received an extra $600 a week from the federal Pandemic Unemployment Compensation program, or PUC, until July 25. The money came from the federal CARES Act to supplement regular unemployment benefits, which typically are 55% of a worker’s regular income. As of Aug. 1, Colorado had paid out $2.3 billion in PUC payments.

Congress has been negotiating how to extend the federal benefit with options that include the Democrat-supported HEROES Act, which would extend the $600 weekly payment till Jan. 2021, or the Senate Republicans’ HEALS Act, which would pay just enough to raise jobless workers incomes to 70% of their regular pay. Both proposals have been stuck in partisan limbo. 

With no breakthrough, Trump signed the order on Aug. 8 to pay an extra $400 of weekly benefits to people on unemployment as part of the Lost Wages Assistance Program. The extra weekly pay would be available until Dec. 6 and funded with about $44 billion from the Disaster Relief Fund. Trump wants states to pay 25% of the weekly benefit.

But Trump’s tapping of state funds puts another burden on the state and the action is not legal, said state Senator Chris Hansen, a Denver Democrat, who had pushed to increase the trust fund long before the pandemic.  

“President Trump does not have the constitutional authority to make financial decisions. Only Congress is in charge of the budget,” Hansen said. “Signing this executive order that doesn’t have the force of law is not useful and it doesn’t actually help people. We need to start with that.”

Trump later told reporters Sunday that states could apply to have the federal government provide all or part of the $400 payments, according to an Associated Press report.

Then again, The Wall Street Journal reported late Sunday that a U.S. Labor Department spokesman said states “are encouraged, but not required” to pay the $100. In states that don’t provide the extra money, people on unemployment would receive only $300 a week from federal funds.

Both of Colorado’s U.S. Senators pushed for bipartisan support in Congress to get something passed to help people on unemployment.

“If we want states to be able to support Americans through this crisis, we should be providing state and local governments with the funding they need to maintain critical services. There is strong bipartisan support for that, so instead of delays and distractions, we need to negotiate in good faith and get a bill passed,” Sen. Michael Bennet, a Democrat, said in a statement.

Sen. Cory Gardner’s office shared a statement of his support to extend unemployment assistance and that Gardner “will continue to fight for three priorities in a bipartisan, bicameral deal: Making sure that we’re stopping the spread and flattening the curve, helping Coloradans with the immediate relief that they need to get through this crisis, and getting businesses up and running again.”

It would be difficult for Colorado to find the extra funds, said Gov. Jared Polis.

“Really the state would not be able to do that for more than two to three weeks. Even that is really stretching our resources to the max,” Polis said, speaking to reporters at a new coronavirus testing site at Water World in Federal Heights.

Polis said he hopes the short span will give Congress enough time to act.

“There needs to be congressional deal between Republicans and Democrat,” he said.

The state’s own unemployment trust fund, which had $1.1 billion before the pandemic, is almost out of money. 

Last week, the state’s economist Ryan Gedney said the trust fund, which is funded by employers who pay for unemployment insurance, had about $75 million to $100 million left and will run out this month. Colorado has already requested a federal loan to cover future payments so jobless Coloradans won’t be left without some income.

Moreno, the state senator, said Trump’s plan, if Colorado were forced to pay $100 extra a week per unemployed person, would only serve to drain the trust fund faster.

“People need help and they need it urgently, which is why (Trump) needs to work with Congress to get this passed,” Hansen said. “To ask the states to pay for a large portion also doesn’t make any sense. The trust fund is (near) a negative balance, meaning that every check we send out (will soon be) a derelict tax on the state of Colorado. People need to understand that.”

Since no guidance rolled out with Trump’s order, the state is “awaiting technical guidance from the U.S. Department of Labor on options for implementation within the states,” Haavind said.

As soon as that’s available, she said the department will let everyone know. 

“When we have additional information, we will update claimants on our website, social media platforms, and directly via claimant communications,” she added.

This story was updated at 5:50 p.m. on Aug. 10 with comments from both of Colorado’s U.S. Senators.