Pennsylvania's new budget includes money to pay off $42 million in debt that was incurred to keep unemployment benefits flowing in the COVID-19 crisis. But lawmakers have failed to adopt a policy that supporters say would protect the system in future downturns and save taxpayers millions.

When the state's unemployment trust fund — the pot of money that covers benefit payments — doesn't have enough money to meet the public need, the state has turned to multibillion-dollar federal loans to cover costs. 

This was true in the Great Recession and in the COVID-19 pandemic, when the state's unemployment rate hit historic new highs. 

The taxpayer-funded debt service tied to the Great Recession borrowing alone topped $570 million between 2013 and 2020.

And while there is Democrat-sponsored legislation that proponents say would keep more money in the trust fund and avoid (or at least minimize) similar debt, the proposal has been stagnant since February of 2021.

Spotlight PA explains the push and the pushback.

THE CONTEXT: The legislation, HB 549, would update aspects of the state's unemployment program, including the solvency formula that determines how much money the unemployment trust fund should have on hand.

That calculation also guides the revenue mechanisms, like unemployment taxes paid by employers, that feed the trust fund. When the solvency rate gets low enough, unemployment taxes on employers go up. 

HB 549 proposes a new and more aggressive solvency formula that would predict future needs based on previous peaks. Supporters say that would ensure revenue mechanisms remain robust enough to keep the coffer adequately stocked, lowering the reliance on costly loans. 

But critics of the proposal, including influential business groups, say keeping unemployment taxes higher for longer is unfair for already struggling business owners, and lawmaker opposition has largely followed their lead.

» BUDGET BREAKDOWN: Join us Tuesday, July 26 at 6 p.m. on Zoom for a free breakdown of Pa.'s multibillion-dollar budget and how it will impact you. Register for the event here and submit questions to events@spotlightpa.org.

NEW TITLE: Pittsburgh Public Schools has named Wayne Walters as its new superintendent, per WESA. Walters served as interim superintendent after Anthony Hamlet resigned amid scandal last September.

NEW HOUSE: The Sixers would leave Wells Fargo Center for a new, $1.3 billion arena in Center City under a new privately funded proposal, 6ABC reports. The team launched a website explaining the idea.

SAVE UP: Efforts to protect historic African American cemeteries in Pennsylvania will get a $50,000 boost from a national cultural preservation group. Axios explains where the money will go and why it's needed.

HILL HOUSE: An unusual, nearly 2,000-square-foot house that's up for sale in Berks County sits on more than 10 acres of wooded land and has "grass on the roof that can be mowed with a tractor," ABC27 explains.

PA BINGO: National Pennsylvania Day has come and gone, but we can still play a round of Pennsylvania Day bingo, via @PennsylvaniaGov.