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Using Federal COVID Funds for Direct Stimulus Rather Than Unemployment Trust Fund Would Help Missourians and Spur Local Economies

For Immediate Release:November 10, 2020

The supplemental appropriations bill currenting moving through the Missouri legislature would allow federal COVID relief funds to be used to replenish the state’s unemployment trust fund – at the same time that the Missouri Department of Labor decreased the unemployment tax assessment for businesses. Missouri’s unemployment assessment is already quite low, and many Missourians who have been most impacted by COVID are continuing to suffer extreme hardship, including lasting unemployment. A better use of remaining COVID funds would be a stimulus payment to Missourians most impacted by COVID.

“A stimulus payment for families would not only assure that remaining federal COVID funding would flow to Missouri families who are most in need,” said Amy Blouin, President and CEO of Missouri Budget Project, “but their spending would help stimulate local economies across the state.”      

Missouri Budget Director Dan Haug indicated yesterday that up to $400 million could be moved to the unemployment trust fund before the federal deadline for spending COVID relief funds. Although the trust fund has been significantly depleted over the last seven months, in the normal course of operations, businesses would be assessed a slightly higher unemployment tax rate to rebuild the fund. However, the Missouri Department of Labor just announced that the unemployment tax assessment will be decreasing.

“While federal COVID dollars can be used to partially replenish the trust funds, Congress didn’t intend for the funds to be used for the purpose of actually lowering business assessments,” continued Blouin.

Missouri’s unemployment assessment is already quite low. The average rate of 1.24% is only applied to the first $11,500 of income per employee – which results in a business contribution of just $142.60 per year per employee to the trust fund. Beginning in 2021, the amount of income subject to the tax would be reduced, allowing businesses to decrease their contribution to the trust fund. The decrease will be very tiny for most businesses – with the new contribution of just $136.40 per employee per year – a savings of $6.

“At the same time, many of the Missourians who have been most impacted by COVID are continuing to suffer extreme hardship, including lasting unemployment,” said Blouin. “In the short term, many of them may be eligible for extended and special pandemic benefits, but as this crisis continues, many Missourians will exhaust all benefits.”

As of August, the state had 137,600 less jobs than it did a year ago (Bureau of Labor Statistics). Those who have been able to return to work are likely earning less than they did previously.  And, as of September 30th, 82,516 Missourians had exhausted their regular Unemployment Benefits (Missouri Department of Labor). Given the recent resurgence of COVID rates, Missouri’s unemployment levels could surge as well.

“Policymakers could both stimulate local economies and help Missourians struggling to pay their bills by providing a stimulus payment to Missourians who have been most directly impacted by unemployment due to COVID,” concluded Blouin.


The Missouri Budget Project is a nonprofit public policy analysis organization that analyzes state budget, tax, and economic issues.

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