The state’s labor department is planning to borrow $1.7 billion from the federal government to cover the costs of jobless benefits for the record-high number of residents who’ve been out of work during the COVID-19 pandemic.

Labor officials plan to submit an application by the end of June to the Trump administration to replenish its trust fund, according to Angela Delli-Santi, a spokesperson for the New Jersey Department of Labor and Workforce Development.

As of June 12, the state paid out $2.1 billion in jobless benefits to a record 1.2 million New Jersey residents since March 16. There is currently $1.5 billion left in the state’s unemployment trust fund.

“We had one of the strongest trust funds in the nation when we went into this pandemic,” Labor Commissioner Robert Asaro-Angelo said at a press briefing last week in Trenton.

This new $1.7 billion loan would cover the state’s unemployment costs for August, September and October, according to Deli-Santi.

Requests are submitted one month in advance to cover increments of three months, and require the nod of approval from Gov. Phil Murphy before the labor department could go ahead with efforts to borrow the money.

“They are like a line of credit, allowing N.J. to draw down funds as needed,” she added in a statement.

Under the terms of the loan, the state would not have to pay interest until the end of 2020.

Employer contribution rates would stay the same through New Jersey’s 2021 fiscal year, which ends on June 30, 2021. It’s not clear whether the rates will go up for the 2022 fiscal year, which starts the next day.

The COVID-19 pandemic swept across the state in early March, forcing the Murphy administration, and many other state governments, to order mass business closures and enact travel bans and stay-at-home orders. Industries such as restaurant and hospitality, entertainment, recreation and retail have been particularly decimated.

That’s driven unemployment up to 15.3 percent—New Jersey’s highest rate since the U.S. Bureau of Labor Statistics began collecting state-by-state data in 1976.

Last week, the Federal Reserve projected that nationwide unemployment would only fall to 9.3 percent, which could mean a slow recovery from the current recession.

Restrictions in New Jersey are only just being lifted, but a surge in new cases across the country is prompting concerns that state governments may have to reverse course and enact new lockdowns.

In total, the state has paid out $6.2 billion in jobless benefits – the remaining $3.7 billion of that from the federal expansion outlined in the Coronavirus Aid, Relief and Economic Security Act, which includes an added $600 per week in benefits.

“NJ also borrowed during the last recession, then repaid the loan when the economy improved and people returned to work,” Deli-Santi added.