FISCAL NOTE

Date Requested: February 21, 2017
Time Requested: 01:30 PM
Agency: Workforce WV
CBD Number: Version: Bill Number: Resolution Number:
2582 Introduced SB365
CBD Subject: Governor -- Bills Requested By


FUND(S):

UNEMPLOYMENT TRUST FUND

Sources of Revenue:

Other Fund UNEMPLOYMENT TRUST FUND

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    Based upon the enacted law change of March 1, 2016 the Governor, through an executive order, may request to borrow funds from the Revenue Shortfall Reserve Fund. The amount of funds borrowed and outstanding under this law may not exceed $50 million at any one time. In addition, the law also states that the Governor may not borrow funds from the Revenue Shortfall Reserve Fund unless the Executive Director of WorkForce West Virginia has projected that the balance in the state’s Unemployment Compensation Fund will be less than $50 million at any time during the next thirty days. Therefore, this estimate has been determined to be the maximum amount the Governor can request to borrow, which is also the maximum that can be outstanding at any given time.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 -50,000,000 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    Due to the fact that this law would only extend the time frame that the Governor can request to borrow funds for the Unemployment Compensation Fund, this estimate has been projected using the maximum amount that can be borrowed or outstanding at any given time, which is $50 million. It is imperative that the ability to borrow from the Revenue Shortfall Reserve Fund remain an option to ensure the Unemployment Compensation Fund remains solvent, as well as TO ensure no adverse effects from borrowing from the US Department of Labor (USDOL) are extended to the state’s employer community. There are three main factors which could occur if the Unemployment Compensation Trust Fund would have to be stabilized by a USDOL loan. These loans are subject to a 2.2124 interest rate in 2017, employers would face additional taxes to repay the loan because loans cannot be paid using funds from the state’s unemployment fund or from federal funds. If the outstanding loan is not paid in full on the due date the employers can lose .3% of their current credit reduction on their Federal Unemployment Tax Act (FUTA) for each year the loan is overdue.



Memorandum


    



    Person submitting Fiscal Note: MICHELLE PAINTER
    Email Address: MICHELLE.PAINTER@WV.GOV