This past legislative session, the legislature passed HB1906 which temporarily increases the amount of unemployment insurance (UI) checks by $45 as well as raised the minimum insurance benefit amounts by drawing down the state's health UI trust fund. The $45 is temporary, however, and only extends to the end of the year. At first this was part of the Governor's plan to help stimulate the economy. As I pointed out, however, raising unemployment insurance benefits doesn't fall under the category of economic stimulus. It's just increasing government benefits.

That being said, I was less concerned about this legislation because our state's UI trust fund was over $4 billion at the beginning of the year (which has since declined to about $3.7 billion). This means the state has about 18 months worth of benefits available in the trust fund. This is 50% more than the Department of Labor recommends (12 months).

The original fiscal notes on HB 1906 calculated the draw-down rate at 7.5% unemployment, but Washington's unemployment rate has not been below 7.5% since December 2008. Therefore, the state is drawing down from the UI trust fund faster than anticipated.

According to the Employment Security Department, the March forecast shows a 24% bump in the cost of the temporary! benefit. The Department uses these forecasts to guesstima! te costs and November's forecast showed a $187 million cost for the $45 temporary increase in UI benefits (through 2011) but now that has been updated to $231 million. Again, this is off of the March forecast, so the June forecast released last week will most likely increase these costs. ESD won't have that information available for a few weeks.

True, a $231 million hit to a reserve fund of $3.7 billion is not a huge amount. But the latest ESD Economic Update also contains information that based off of this year's 1906 and 5963 legislation, the trust fund could dip as low as 11.7 months by calendar year 2011 -- or $2.4 billion. This would put the tru! st fund below the DOL recommended levels.

Why is this a concern? Because unforeseen expenses can lead to tax increases. And since employers pay 100% of UI premiums do we really want to make the cost of labor even more expensive?