Illinois paying off $450 million of unemployment insurance fund debt
SPRINGFIELD (WGEM) - The Illinois Department of Employment Security is paying off another chunk of debt in the Unemployment Insurance Trust Fund. Gov. JB Pritzker announced Tuesday that IDES is putting $450 million toward the federal loan the state received to help with unemployment payments during the worst of the pandemic.
Pritzker said this payment will reduce the remaining $1.8 billion balance by 25%. The hole in the UI Trust Fund is now $1.3 billion.
The administration explained this payment was possible due to unemployment claims reaching historic lows over the past five months. IDES Director Kristin Richards said her agency now has the capacity to make the payment without impairing the ability to pay unemployment benefits for people in need.
The governor said this payment will also reduce interest costs on the UI Trust Fund debt by $10 million over the next year. Pritzker noted that IDES plans to pay off the remaining balance by the end of 2022.
“Illinois’ fiscal decision-making is focused on debt reduction and continuing to put the state on firm fiscal footing for our working families,” Pritzker said.
State lawmakers passed a plan in March of this year to use $2.7 billion from the American Rescue Plan to cut the original $4.5 billion loan down to $1.8 billion. Richards said ARPA funds helped supplement the UI Trust Fund and provide economic relief to the unprecedented amount of people filing for unemployment during the pandemic.
“At the same time, IDES is engaged in exciting work with the United States Department of Labor to support benefit integrity, claims management, and equitable access to UI services,” Richards said. “Recently, IDES announced a $6.8 million award to fund enhanced data collection, to understand barriers to UI access, and implement strategies to address those barriers.”
Richards explained that those are all efforts IDES is undertaking to support a strong unemployment insurance system for Illinoisans. IDES plans to work with lawmakers and stakeholders from the business and labor communities to pass an agreed bill addressing the remaining debt this fall.
“Director Richards made it crystal clear that working-class people in the state of Illinois will have support, will have that backstop of our UI system,” said Rep. Marcus Evans (D-Chicago). “And of course the more we stabilize the finances of Illinois, the more we can help the working class and the poor.”
Evans stressed that this payment is another important step in recovery from the financial crisis created by the COVID-19 pandemic. Still, Republican lawmakers are upset that Illinois is one of only five states to still owe money on a federal unemployment Trust Fund loan. Sen. Sue Rezin (R-Morris) said Tuesday’s announcement comes on the verge of the largest tax increase on businesses in state history and does little to prevent it from happening.
“This $450 million already paid by Illinois businesses will have no impact on future taxes that they will be forced to pay if we don’t completely repay our loan,” Rezin said. “We should have and could have filled this hole with the unexpected money we received from the federal government.”
Illinois received $8.1 billion from the American Rescue Plan in 2021 and many Republican lawmakers hoped Democratic leaders would agree to use a larger chunk of that money to pay off the full $4.5 billion hole in the UI Trust Fund. Lawmakers now know that 31 states used their ARPA allocations to completely pay off their federal loans and replenish their Trust Fund balance.
Sen. Win Stoller (R-Germantown Hills) said it is disingenuous for Democratic leaders to pat themselves on the back for the payment when the burden of paying the remaining $1.3 billion will be placed on struggling Illinois businesses.
“Illinois businesses did not create the lockdowns or give out billions of dollars of unemployment benefits to fraudsters that helped create our state’s nearly $5 billion UI Trust Fund debt,” Stoller said. “Now, Democratic lawmakers expect businesses to fix a problem of their own creation, which they could’ve easily fixed with the billions of dollars that the federal government provided them.”
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