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Illinois will soon start paying interest on its huge unemployment insurance trust fund debt

Tuesday, Sep 14, 2021

* Route Fifty

At least four states paid back money in the last week they borrowed from the federal government to cover unemployment benefits—narrowly avoiding additional interest on the loans.

Hawaii, Nevada, Ohio and West Virginia announced the loan repayments within the last week. A remaining 10 states have a combined outstanding balance of more than $45 billion that they will now begin to accrue interest on, according to the Treasury Department.

When states exhaust their unemployment trust funds, they are allowed to borrow money from the federal government to ensure benefits continue to be paid. Twenty-two states took out what are referred to as Title XII advances during 2020. The loans were initially interest free, but starting Monday, states with outstanding loans began to accrue 2.3% interest on the borrowed sums. […]

Unemployment benefits are paid for through taxes that states levy on businesses. When unemployment trust funds are depleted, state and federal laws trigger higher business tax rates on employers to replenish the funds. The 10 states that have outstanding loan balances California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania and Texas—could be poised to see significant tax hikes on employers next year if they do not pay the money back before increases are triggered.

Illinois has $5 billion in leftover federal stimulus money. A large chunk of that will likely be used to pay down its $4.2 billion debt unless the federal government somehow intervenes.

- Posted by Rich Miller        

11 Comments »
  1. - Sue - Tuesday, Sep 14, 21 @ 11:24 am:

    So how does this number impact all of the great news Susan Mendoza is always touting on our debt payments?


  2. - DuPage - Tuesday, Sep 14, 21 @ 11:37 am:

    2.3%. That’s still a lot lower then a lot of the other debts Illinois has.


  3. - Blue Dog - Tuesday, Sep 14, 21 @ 11:38 am:

    Craziness. The feds print trillions. Not just Illinois in this pickle. Will there ever be a day when the chickens come home to roost?


  4. - Anyone Remember - Tuesday, Sep 14, 21 @ 11:46 am:

    === … our debt payments?===

    You mean bills being paid late?


  5. - JS Mill - Tuesday, Sep 14, 21 @ 11:48 am:

    =So how does this number impact all of the great news Susan Mendoza is always touting on our debt payments?=

    So paying bills are bad? The new fiscal conservative I guess.

    It has no impact.


  6. - Blue Dog - Tuesday, Sep 14, 21 @ 11:56 am:

    JB would gain a huge amount of respect if he paid the $4.2 billion immediately. Heck, he would gain presidential credibility.


  7. - Flying Elvis'-Utah Chapter - Tuesday, Sep 14, 21 @ 11:59 am:

    See Sue got out the ole Coleco calculator.

    Ah, for those heady days of paying interest on bills that were accrued months/years before.

    Yep, those were the days


  8. - Flying Elvis'-Utah Chapter - Tuesday, Sep 14, 21 @ 12:01 pm:

    Blue Dog, finger not only on the pulse of Illinoisans, but Americans as well.

    Who holds your hand while crossing the street?


  9. - natty lite - Tuesday, Sep 14, 21 @ 12:16 pm:

    “The 10 states that have outstanding loan balances … could be poised to see significant tax hikes on employers next year if they do not pay the money back before increases are triggered.”

    This isn’t quite right. The tax hikes on employers don’t kick in until the year after your loan is outstanding for two January 1’s and the second November 10. States didn’t have a loan balance on 1/1/2020. They did have a balance on 1/1/2021, so the states can repay their loans by 11/10/2022 (better yet, before 1/1/2022 to reset the clock) and avoid the 2023 tax hike. Paying the low interest for the time being isn’t the worst thing in the world if that’s what they want to do, but there would need to be a plan if there’s still a continuous loan balance as we approach 11/10/2022.


  10. - Anotheretiree - Tuesday, Sep 14, 21 @ 12:17 pm:

    ==BD Chickens roosting== Our debt at 108% of GDP is troubling. Makes a pending confrontation with China financially as well as militarily problematic. But its not at panic levels. Japan is at 224% and there is no Japan death watch that I know of. I worry that all this Covid aid, which also helped to repair Rauners budget damage, will be reversed by a GOP Gov with no budget.


  11. - Fly like an eagle - Tuesday, Sep 14, 21 @ 3:16 pm:

    == Our debt at 108% of GDP is troubling. Makes a pending confrontation with China financially as well as militarily problematic.==
    It’s not troubling at all. We don’t have a limited time to pay that, it’s not a mortgage or a ballon loan.
    We can pay as much or as little of the debt we want. We have til the sun becomes a black hole to pay off our debt. After the sun becomes a black hole nobody cares about collecting the debt.


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