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Political analyst Dr. Jeff Sadow explains how the added burden of COVID 19 unemployment is putting the state in financial danger.

In a recent article at, Sadow explains how the added expense to the state because of extended - and increased - unemployment compensation funded by the federal government could put the state government in an even larger financial hole.

"Insofar as a state economy goes, even as pumping in tax dollars creates a stimulative economic effect that also reaps some lesser tax revenues, the depressive effect likely has a net negative impact. But of greater importance, this more quickly drains the unemployment insurance fund kept with the federal government."

Sadow then talks about how a soon to be passed second Coronavirus stimulus bill, with another round of unemployment payments, could hit the state even harder than the first. For example, if the Louisiana unemployment balance falls below $100 million, state law requires that a tax on businesses kicks in to make up the shortfall.

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"However, another consequence looms upon that declaration. Statute also requires when the balance falls below $100 million the imposition of a 'solvency' tax of up to 30 percent more, in six months until a sufficient positive balance exists."

And Sadow also voices concern about the COVID related shutdowns long term effect of the state's economy. "In September we'll find out what the impact is going to be from the Revenue Estimating Conference. But it's going to cause a substantial drop for a number of years and it could be that the unemployment compensation could be the biggest portion of that."


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