By Katherine Gregg
Journal State House bureau

By April, the fund that pays unemployment benefits "will likely'' need a loan to continue paying benefits, and a House committee is holding a hearing today on Governor Carcieri's bid to borrow that money from the state's temporary disability insurance.

This would mark the second time since October the Carcieri administration tapped into the disability fund to pay state bills.

Laura Hart, the chief spokeswoman for the state's Department of Labor & Training, refused comment yesterday on the financial health of the unemployment-compenstaion fund. She said the department would have no comment until after the hearing.
But a brief synopsis of the governor's proposals says the intent is to repay the TDI fund "as soon as possible in the first week of May 2009.''

Late last year, state labor officials acknowledged that increasing unemployment in Rhode Island was draining the fund that the state maintains to pay unemployment benefits. If the trend continued, they said, the state might need need to seek a federal bailout to keep benefits flowing,

But they raised a concern about going that route because a bailout, in the form of a loan from the federal government to the unemployment insurance trust fund, could trigger a hike in unemployment taxes for employers - on top of the one they already face next year. It is not yet clear whether a loan from the state's own TDI fund would avert that.
In October, the state was forced to draw $25 million out of the temporary disability insurance fund - financed by mandatory payroll contributions by private sector workers across the state - to make a promised school-aid payment to the cities and towns.
It could not be immediately determined if the state has repaid the earlier borrowing to make an endangered school aid payment.