New York and Texas state officials announced yesterday that their unemployment insurance funds will run out in the next few weeks unless they receive over $1.5 billion in loans that they are requesting from the federal government. While the federal government will almost certainly come to the states' aid---as it did with other states in the mid-1970's, early 80's, and early 90's---it will likely follow the practice adopted in the early 80's of charging the current interest rate of 6.3 percent on the loans. Many experts feel that the uncommon policy in Texas and New York of lowering unemployment taxes during times of prosperity, rather than building up financial reserves, is directly responsible for the current dilemma which may force the states to finally adopt more responsible practices.
See KIRSTIN DOWNEY GRIMSLEY, The Washington Post, January 31, 2002