Post 9/11 Federal Jobless Funds Went to Employer Tax Breaks

January 30, 2003 ( - State officials more frequently used last year's federal unemployment insurance funds for employer tax breaks than for improved worker benefits.

A new report by the National Association of State Workforce Agencies said that 23 states used part of their share of the $8 billion in funding to slash unemployment tax rates, according to a Washington Post report.

Officials in 22 states used the money to improve services such as job training while 17 states spent money in unemployment insurance administration. Only the District of Columbia and seven states improved jobless benefits. In Mississippi, $16 million of the $64.7 million the state received will be used to build a state office building.

The federal funding was intended to ease the pain of unemployment following the September 11, 2001, terrorist attacks and provide an economic stimulus.

State Tactics

In Texas, which borrowed money from the federal government last year to restore its unemployment insurance fund to solvency, state officials used the post-attack money to reduce the size of the employer tax increase they had projected. In effect, that reduced the employer tax bill by about $596 million in 2003, the report said.

Delaware, like many states, used the money to replenish the state fund, avoiding the need for higher corporate taxes.

District of Columbia officials used the money to loosen rules regarding how long a worker must have been employed before they become eligible for benefits.