DOVER, Del. (AP) — Delaware officials plan to borrow hundreds of millions of dollars from the federal government to pay benefits on an avalanche of coronavirus-related unemployment claims and replenish the state’s depleted unemployment insurance trust fund.
Department of Labor officials said Thursday that the trust fund, which had a balance of $165 million before Gov. John Carney shut down businesses in March in an effort to stem the spread of the virus, will be depleted by mid-July.
Officials have submitted an initial request for $196 million to cover payments through August, and are expecting to borrow another $150 million in the fourth quarter.
“As soon as we get that money it goes out the door,” said state Labor Secretary Cerron Cade.
State officials currently estimate that roughly $530 million will be needed to pay benefits through the end of the year and restore the trust fund to its pre-emergency level.
The federal government’s coronavirus response package includes a provision allowing states to borrow money at zero interest for the rest of the year to cover unemployment benefit costs, as long as the loans are paid back by the end of the year. Remaining balances and any future loans would be subject to interest payments, although states are hoping that federal officials extend the interest-free provisions — or forgive the loans entirely.