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State accumulating interest on unemployment insurance debt at about $2 million a week

Friday, Jan 7, 2022

* This non-GRF debt has been piling up at about $2 million a week since September, when the state made its last payment. Here’s Greg Hinz

As Springfield prepares for an abbreviated spring legislative session, one issue that hasn’t received much attention beyond the pages of Crain’s is about to pop to the fore. That’s how the state—and its employers and workers—will pay off a $4.5 billion debt in Illinois’ unemployment insurance program. […]

The jobless figures since have slid down, with the Illinois unemployment rate now at 5.7%. But the state still owes Uncle Sam and, with hopes fading that Congress will forgive the debt, the feds are entitled to their money and roughly $2 million a week in interest. […]

[Illinois Comptroller Susana Mendoza] says the state probably will have to tap some of the roughly $3.2 billion in funds left over from the last federal COVID relief bill, known as the American Rescue Plan Act of 2021, or ARPA.

* Greg interviewed Speaker Chris Welch today and brought up the subject

Greg Hinz: Mendoza was suggesting just the other day that we ought to tap some of these ARPA funds, the federal covid relief funds that we still aren’t available to deal with it. I hear even from some labor folks, they’re worried that if you guys don’t do anything, some benefit cuts would automatically go into effect. Do you expect to deal with that issue and if so, how?

Speaker Welch: I had a conversation with Comptroller Mendoza this week in Springfield. It’s something that we talked about when we announced that we were paying off the balance on the loan that we took out two years ago. And now this is something that we’re turning our attention to. This is an issue that is on the table for us to address. We agree that it’s something we want to address. How we want specifically to do it, we don’t know yet. It’s still early. But this issue is on the table for us to come up with a solution to

A.D. Quig: Are you open to using ARPA dollars to pay back a significant portion of that loan?

Speaker Welch: Well, I’m sure we’re gonna have to use some portion of the ARPA dollars to pay that back. Again, I don’t want to get ahead of the process. I want to make sure all stakeholders have input on this, the Senate side the governor’s office. But I think we’re going to have to be open to anything. And certainly that’s a real possibility.

As always, please excuse all transcription errors.

The governor’s office told me that agreed bill process meetings are starting “and we’re going to work together to find a responsible solution.”

If not, there’s going to be a large tax hike on employers and a big benefit cut for unemployed workers.

- Posted by Rich Miller        

  1. - Donnie Elgin - Friday, Jan 7, 22 @ 12:17 pm:

    Illinois politicians have a knack for using federal Covid relief dollars creatively…

    “Lightfoot no doubt saw the arrival of billions of federal dollars as a partial exit from the city’s financial serfdom. However, paying banks was never the intended use of those relief moneys; in fact, the Federal Reserve explicitly prohibited using funds for debt service. Nonetheless, the Lightfoot administration proposed a workaround, by essentially paying down debt service from the city’s corporate fund, and then redirecting relief dollars into that fund”

  2. - Nick - Friday, Jan 7, 22 @ 12:26 pm:

    Wasn’t there an issue with the treasury not allowing/being clear about ARPA funds being okay for paying off unemployment debt? Or am I confusing that the GRF loan.

  3. - Cool Papa Bell - Friday, Jan 7, 22 @ 2:14 pm:

    At $2 million a week I sure would come up with a solution sooner rather than later.

    And to the Lightfoot move - I’ve wondered a good deal about that. If you just change your budget around for a year or two and direct funds to other areas can’t you just backfill with ARPA? It would seem a big work around to say backdoor in a large pension paydown for a city.

  4. - Blue Dog - Friday, Jan 7, 22 @ 2:26 pm:

    This is a making by the Feds. The solution should come out of the Feds. Better hope there is some compromise in the senate soon on some issues. Illinois employers cannot handle this.

  5. - walker - Friday, Jan 7, 22 @ 2:34 pm:

    Paging Susana.

  6. - 4 percent - Friday, Jan 7, 22 @ 3:49 pm:

    There is a solution - ARPA dollars - which is what dozens of states have done. Illinois is one of only eight states that still has UI debt.

    The $100 million in last year’s budget was not used to pay down debt but rather to fund non-educational employee benefits and cover the overpayments made to workers. Instead of requiring people to return overpayments, Illinois allowed them to keep it and funded it with ARPA.

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