(The Center Square) – The state of Illinois intends to pay off the remaining $1.36 billion unemployment insurance loan balance and replenish the fund for the future.
The agreement will save taxpayers an estimated $20 million in interest costs that would be due next September.
“This bipartisan agreement eliminates the final portion of the $4.5 billion debt forced upon our state during the pandemic and saves Illinois businesses and taxpayers hundreds of millions of dollars over the next decade,” Gov. J.B. Pritzker said during a Tuesday news conference.
Unemployment spiked during the early weeks of the pandemic after the governor issued stay at home orders and limited economic activity by prohibiting in-person service for businesses he declared nonessential.
The agreement between representatives from business, labor, bipartisan members of the General Assembly and the state will contribute more than $1.8 billion in state funds to the unemployment insurance trust fund, which includes the payment of the remaining federal loan balance borrowed under Title XII of the Social Security Act. The remaining $450 million will be placed into the trust fund from state funds as an interest-free loan. As the loan is repaid over the next 10 years, funds will be deposited directly into the state’s rainy-day fund.
“We have a good agreement,” said state Rep. Dan Ugaste, R-Geneva. “It’s good for labor, it’s good for business, it’s good for the people of the state of Illinois.”
For months, Republican lawmakers and business leaders have been calling on the state to repay the loan to avoid paying accumulating interest. Rob Karr, president and CEO of the Illinois Retail Merchants Association, said this agreement is crucial for Illinois businesses.
“It will ensure greater stability in the unemployment insurance systems, and means Illinois employers will face at least $900 million less in taxes over five years than they would have otherwise,” Karr said.
The Illinois Department of Employment Security was hit with a wave of bogus claims during the pandemic. Pritzker was asked if it is known how much was lost to fraudsters.
“The federal government has identified billions of dollars from the federal creation of the PUA program and we’re still working with the federal government to uncover that and also to prosecute people who fraudulently took money from the system,” Pritzker said.
Illinois was one of the few states to borrow money from the federal government for an unemployment insurance fund.
