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Arizona leaders say the unemployment fund could run out by the end of 2020

Nearly a million Arizonans collect unemployment every week and the fund that money comes from is shrinking.

It could be out of money by November, according to Governor Doug Ducey's office.

When not in a pandemic, a $700 million unemployment fund would be considered healthy, but now, every week, it pays out more than $40 million.

Once it’s out of money, and state leaders say it will, the federal government will likely have to loan money to the state as the demand on Arizona’s unemployment system has never been higher.

"Eventually, it will get down to zero," says Dave Wells with the Grand Canyon Institute. The state will likely have to borrow from the federal government like nine other states already have, he said.

RELATED: Unemployment fraud in the DES system impacts those with real accounts

Gov. Ducey's spokesperson, Patrick Ptak, says they’ve had their eye on the fund since March and believe they’re prepared for it.

Ptak says they may consider pulling money from the rainy day fund because if they ask for money from the federal government, it will lead to a tax increase on small businesses.

Increasing taxes is something state leaders want to avoid right now, he added.

"We’ll have to see how things play out," Wells said. He estimates borrowing money would double how much businesses pay in federal unemployment taxes from about $40 a year per employee to $80.

RELATED: DES confirms accounts of some unemployment recipients emptied

This comes at a time many, like Wells, are also asking the state to increase unemployment benefits.

If Congress doesn’t extend the CARES Act, the maximum benefit drops to $240 a week in August. The second lowest in the country.

"This is something that the state has unfortunately neglected for nearly 20 years and as a consequence, we weren’t prepared structurally with our unemployment system for what’s happened with COVID-19 and if it wasn't for the CARES Act we’d be in deep trouble," Wells said.

Increasing unemployment would also lead to another tax increase on small businesses which is something Ptak stressed to me they don’t want to do.

Wells said any increase in taxes would be outweighed by the economic impact of more dollars being spent at small businesses.

Ptak said the governor's office is watching Congress closely to see what extension, if any, unemployment receives.

For more coverage on unemployment in Arizona, click here.