Governors raise concerns about Trump’s executive order, but Holcomb’s position unclear

As governors in other states, including neighboring Kentucky, raise concerns about President Donald Trump’s executive order to partially extend federal unemployment bonus payments, Indiana Gov. Eric Holcomb’s administration is mostly staying silent.

Trump’s order extends additional unemployment payments of $400 a week to help cushion the economic fallout of the pandemic. But states would have to cover 25% of the $400 payment, even as many are dealing with major budget shortfalls.

Congress approved federal bonus payments of $600 a week at the outset of the COVID-19 outbreak, but those benefits expired Aug. 1 and Congress has been unable to agree on an extension.

The National Governors Association issued a statement Monday raising concerns about “the significant administrative burdens and costs this latest action would place on the states.”

The statement, which came from the chair and vice chair of the organization—New York Gov. Andrew Cuomo, a Democrat, and Arkansas Gov. Asa Hutchinson, a Republican—urged Congress to find a solution.

“This resolution should avoid new administrative and fiscal burdens on states,” Cuomo and Hutchinson said in the statement. “It is essential that our federal partners work together to find common ground to help restore our nation’s health and protect our economy.”

Many Republicans have expressed concern that a $600 weekly benefit, on top of existing state benefits, gives people an incentive to stay unemployed because most recipients were making more money on unemployment than they were in their previous jobs.

The White House described the $400 level as an appropriate compromise, and top administration officials including Vice President Mike Pence on Monday urged governors in a private call to pressure Democratic lawmakers to come to a deal.

But Democrats have dismissed Trump’s executive order as a hollow political gesture—not to mention legally questionable—that could ultimately leave millions of Americans without much-needed aid.

It’s unclear how the Holcomb administration feels about Trump’s order and how feasible it would be to implement the $400 payment in Indiana. He has not commented publicly on it, and a spokesperson for Holcomb did not respond by IBJ’s deadline.

In a statement, the Indiana Department of Workforce Development said it is “currently assessing” Trump’s order and “awaiting guidance from the U.S. Department of Labor to interpret the implementation and funding options available for states.”

Several governors said their states simply couldn’t afford to chip in a quarter of the cost, even with the relief money previously approved by Congress.

Hutchinson said it would cost Arkansas an estimated $265 million and “would be challenging and would take some time” to sort out.

Kentucky Gov. Andy Beshear, a Democrat, called Trump’s plan “not workable” in its current form because the $100 per person per week payment would amount to tens of millions of dollars each month.

In California, Gov. Gavin Newsom said providing the 25% match would cost $700 million per week.

“There is no money sitting in the piggy bank,” Newsom said. “It simply does not exist.”

Indiana ended fiscal year 2020 with $1.4 billion less in revenue than expected, which caused the state to tap into its reserves to end the year in the black. The state started the year with reserves totaling nearly $2.3 billion, but that was drained to $1.4 billion by June 30.

Tax revenue collections improved in July, but that was mainly because $900 million in taxes that were normally due in April and June were deferred until last month.

And the state’s unemployment trust fund is running low. As of Monday, the fund was down to less than $158 million. Earlier in the year, the state had more than $850 million in the fund.

In a call with governors on Monday, U.S. Treasury Secretary Steve Mnuchin reiterated the 25% requirement, but he also sought to assure governors that the Trump administration would find a way to cover money that states allocate for unemployment through future legislation.

“We realize that some of you want to use those funds for other things,” said Mnuchin, according to audio of the call obtained by The Associated Press. “And as part of legislation, if you do use those funds for UI, we will agree to make you whole.”

The Trump administration has also said that states can pull from federal coronavirus relief funds already distributed to states earlier in the crisis. But some states have already fully allocated that money for other critical needs. Indiana has allocated or already spent about $1 billion of its $2.4 billion share of the federal CARES Act funding, and state officials have been advocating for Congress to change the law to provide more flexibility on how the dollars can be spent.

Some state officials, both Democrats and Republicans, have also said that Trump’s order could prove to be difficult to implement for technical reasons.

State unemployment agencies struggled badly this spring and summer under the crush of tens of millions of applications, and in most cases took weeks to implement the extra $600 payment after it was first approved.

Andrew Stettner, senior fellow at The Century Foundation and an expert on unemployment aid, said that it could take several weeks for jobless claimants to see the enhanced benefit given the states’ difficulties in updating their unemployment systems.

“No one’s getting a payment from this in August. If they’re lucky, they’ll get it in September,” he said.

That’s in contrast to Mnuchin, who has said the additional payments could be in place within the next couple weeks.

In Indiana, it took weeks for the state to begin processing the additional $600 benefit to unemployed Hoosiers and even longer for independent contractors, individuals who are self-employed and gig economy workers to see those payments because the state had to build new systems to handle the payments.

The proposed $400 federal benefit, with $100 coming from the state, could again require a new system to be built before the money can be distributed.

In Ohio, a spokesperson for Gov. Mike DeWine, a Republican, said the benefit might not take effect for weeks as officials sort out guidance from the U.S. Department of Labor for implementing it and it may require software changes for the state’s unemployment compensation computer system.

Indiana’s DWD said in a statement that it will provide an update on the benefit “when additional information is available.”

Individuals currently receiving unemployment benefits in Indiana do not need to contact DWD in order to receive the additional payment.

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3 thoughts on “Governors raise concerns about Trump’s executive order, but Holcomb’s position unclear

    1. Trump’s “edict” is an Executive Order with which he has no authority to issue. Like 90% of his EOs, it will go down in flames in federal court, even the ones he’s stacked with conservative judges. Also, it was meant to be nothing more than a lazy attempt at a political salvo. Not even Republican Senators are taking any of it seriously. That’s why Holcomb is sitting on his hands – like all the other Rs – he knows it’s going nowhere and they still need to stike a deal with the Dems.

  1. What a piece of garbage. If math isn’t your strong suit, this proposal cuts the federal subsidy by half, from $600 to $300, and the $300 is going to be paid only if cash-strapped states will kick in an extra $100, which they don’t have. The state U/C systems are antiquated so it would be weeks before they can make a switch. Holcomb is hiding since he’s afraid of upsetting the orange one and he’s waiting for the whole executive order nonsense to go down in flames on its own accord.