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New Mexico taps federal loans to pay unemployment

Associated Press

SANTA FE – New Mexico has depleted its unemployment benefits trust fund and begun to use federal loans to keep up with claims — spending that can trigger higher taxes if not repaid, a top labor official said Tuesday.

Workforce Solutions Secretary Bill McCamley said that unemployment trust reserves were exhausted on Sept. 8 — and that the state has spent about $35 million since then in borrowed federal funds to maintain unemployment benefits.

New Mexico’s unemployment rate of 11.4% in August exceeds neighboring states as health officials take gradual steps toward reopening the economy and schools, where most pupils are still studying from home.

McCamley said about 123,000 people were receiving unemployment benefits as of last week in a state of 2.1 million residents. That’s up from 9,600 active claims in March before the COVID-19 pandemic struck.

The tourism and hospitality industry has been especially hard hit, along with oil production and construction.

In June, lawmakers put a freeze on unemployment insurance tax rates for businesses through the end of 2021. McCamley told a state House committee that the state will eventually need to reduce unemployment benefits, raise payroll taxes or borrow or refinance federal unemployment loans. The administration of Lujan Grisham does not support a decrease in benefits, he said.

New Mexico Workforce Solutions Secretary Bill McCamley speaks about expanded unemployment benefits at a press conference with Gov. Michelle Lujan Grisham July 23, 2020.

Many recipients of unemployment insurance are exhausting the state’s 26-week benefit allowance and tapping into 13 weeks of additional federal unemployment payments, at no cost to the state, McCamley said.

He also said the administration of Gov. Michelle Lujan Grisham is contemplating a decision on when to reinstate a requirement that unemployment beneficiaries actively look for work — a looming day of reckoning for residents still hoping to be rehired by prior employers.

“We are going to start once again — depending on the path of the virus — to start saying OK to everyone, ‘It’s time to get back to work,’” he said.

Republican legislators prodded McCamley for indications of when the governor might ease current business restrictions under an emergency health order.

“In our area, people want to get back to work, they’re willing to take a business risk on whether or not they catch this” virus, said GOP Rep. James Stricker, an oil landsman from Farmington.

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McCamley said the state continues to pursue a science-intensive decision process on reopening the economy that places a premium on public health and limiting coronavirus infections.

The current emergency health order limits businesses including retail outlets, private schools and indoor restaurant areas to 25% of maximum capacity, while hotels and lodges can seek certification for 75% occupancy. Masks are mandatory in public, with a 10-person limit on public gatherings and a 14-day self-quarantine requirement for travelers entering from high-infection rate states that currently include Texas, Arizona and California — but not Colorado.

“The more people can control the virus with their behaviors, the more we are going to be able to feel comfortable introducing risk into communities and hopefully people are going to get back to work,” he said.

New Mexico health officials reported an additional 110 coronavirus cases and three additional deaths on Tuesday, bringing the total statewide number of cases to 27,790 and 854 deaths.

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The spread rate has increased slightly since early September. Officials say the increase was expected after some restrictions were lifted and it’s likely that increased travel around the Labor Day holiday had a role.

If the curve starts to creep up as steeply as it did in late June and early July, Human Services Secretary David Scrase and state epidemiologist Chad Smelser said Tuesday during a briefing that it could be cause for concern.

“People moving around and interacting person to person leads to more transmission,” Smelser said. “So whenever you do reopen, we do expect to see more cases. The question is — and it’s not an easy question to answer — when does it become a point at which you want to further restrict person-to-person interactions.”