Colorado unemployment debt puts lawmakers $1 billion in the red

DENVER (KDVR) — State leaders have detailed the strong fiscal situation Colorado finds itself in. Although the state has recently decided to make large distributions, there is still one area in the red, and to the tune of a billion dollars.

Colorado is one of the few states that owes the federal government a significant portion of unemployment insurance money. Lawmakers are hoping for a new plan will soon remove the state from this list.

“The Unemployment Insurance system has come under significant strain during the COVID pandemic,” said State Senator Chris Hansen.

The Colorado Fiscal Institute says 375,000 Coloradans filed for unemployment in the first two months of the pandemic. All claims quickly exhausted the funding that was in the system.

“We had massive needs on the unemployment fund, which were not anticipated. So as a result, we had this massive debt to the federal government that we now have to deal with,” said Sen. Bob Rankin of Garfield County.

How will Colorado reimburse the Feds for unemployment?

The state owes the federal government $1 billion. So a bipartisan group of lawmakers is seeking to pay back some of it using $600 million in stimulus funds.

“I mean we have a lot of work to do with the different buckets of money. We’re working on mental health care (that’s one of the buckets we use for federal dollars), we’re working on housing – $550 million for accessible housing – so you can always do more. I think as a legislature, as a body, we’re very comprehensive in how we try to address some of the most critical areas,” Rep. David Ortiz said.

The state expects the remaining debt to be paid by employers who contribute to this fund by the end of this year. Leaders say the new ruling is aimed at ensuring that companies do not tackle state burdens alone and that workers will get the benefits they need.

“We could have another pandemic-related recession in just a few months. I hope not, but it can happen. And so accelerating solvency and getting us more on a solvent basis will be good for us in the long run because the system will be ready to pay out benefits if it needs to,” said Kathy White of the Colorado Fiscal Institute.

Lawmakers said the pandemic has exposed some flaws in the unemployment insurance system. They also plan to make certain fixes made during the pandemic permanent through this legislation.

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John A. Bogar