Arizona has become the latest state to pay off the money it had to borrow to provide unemployment benefits to workers during the recession.
Last week the state paid off the last $44 million it owed to the federal government for loans it took out to fund checks to unemployed workers. The fund now has a balance of $160 million. This is the first time Arizona’s unemployment program has been out of debt since 2010.
The health of the unemployment fund is an indication that Arizona’s economy is rebounding from the Great Recession. During that period the state saw unemployment rates soar above 11 percent in late 2009. Those high rates of unemployment drained the state’s fund of $1 billion in reserves. Arizona joined several other states and borrowed from the federal government in 2010. At one point the state owed $420 million.
The final payoff of the federal loan is good news for employers in the Grand Canyon State. Because of the borrowing, they were hit with a special assessment of $21 a year per employee to help repay the loan, plus an increase in their federal unemployment taxes.
Currently state employers are paying about $160 a year in unemployment taxes per employee. That rate is expected to come down even more as the trust fund balance rebuilds.