In the past 20 months, Nevada has spent $2.86 billion on unemployment claims by out of work Nevadans.
Cindy Jones, employment security administrator, said most of the money paid out was federal but that the state has not only spent all unemployment tax revenues collected in that time but drained an unemployment insurance trust fund of more than $700 million and been forced to take out loans totaling more than $340 million from the federal government.
Since July 2008, she said the state has paid benefits of $1.66 billion in state funding and $1.2 billion in federal money.
With Nevada's unemployment rate still above 13 percent, she said that debt is growing every day. Eventually, she said, the federal government will have to be paid back. Right now, states borrowing money are doing so interest free. But she said if the state can't pay the loans back before September 2011, it will be hit with a 4.9 percent interest rate.
She said Nevada is far from alone.
"We're hopeful that since there are over 40 states borrowing upwards of $90 billion, they will at least extend (the interest waiver) another year," she said.
When it's time to pay the loans back, Jones said the bill will fall on Nevada businesses.
"It's an insurance fund. Unemployment benefits are funded by a tax to businesses," she said.
She said it's not possible at this point to determine how much interest Nevada will run up before the economy turns around and unemployment goes down.
As of the end of February, there were 187,700 Nevadans looking for work.
Not only the loans, but the interest, she said, will be paid by Nevada businesses. Under federal law, if the state doesn't raise its unemployment insurance rates and start making those payments in two years, the federal government will raise the federal unemployment insurance rate to begin paying back the loans and interest.
"The question is how quickly to raise taxes," she said. "There's only so much time before the feds increase the tax."
Nevada's unemployment insurance rate is currently at an overall rate of 1.34 percent.
The current federal tax is set at 0.8 percent.
Nevada, she said, did better than many other states, which didn't have the $700 million plus insurance trust fund when the recession hit. She said some states started taking loans when unemployment was just 6 percent.
"We held out until 13 percent," she said.
