Illinois’ Unemployment Fund is Drained. Who Pays to Fill It?
Posted by Sleuth on October 21, 2020, 3:16 pm
(The Center Square) – Illinois’ Department of Employment Security said it has paid out $16 billion in unemployment benefits to more than 2 million people since the beginning of the pandemic.
That fund, already borrowing federal money that must be repaid, must eventually be replenished, but who will bear that responsibility?
Unemployment insurance is funded by taxes and employers, both at the federal and state level. The cost is the same for all states for the federal unemployment taxes. Businesses pay varying levels of state employment tax based on their number of workers, type of business, and how much the state pays out in unemployment benefits. A higher maximum unemployment benefit typically leads to a higher state unemployment contribution from businesses.
Greg Baise, treasurer of the Coalition for Jobs, Growth & Prosperity, warned last week that the cost of making the unemployment insurance trust whole again would inevitably fall on employers.
“Illinois businesses will have to be paying taxes for years to repay the loss of those funds in the unemployment insurance system,” he said.
Businesses will also pay a lower rate if they don’t lay off workers often. Illinois Policy Institute senior budget and tax research director Adam Schuster said the state could suspend that provision so companies that laid off employees because of the pandemic don't get penalized.
“While unemployment taxes would still go up, they wouldn’t go up on small businesses who have had to lay people off through no fault of their own,” he said, adding that many other states had already done so.
This isn’t the first time Illinois’ unemployment funds were drained. In November 2011, Illinois lawmakers had to borrow $2.4 billion to pay back the emergency loan they had to take out at the height of the Great Recession to refill the UI trust. At the time, the state's unemployment fund was one of a handful of state funds without enough cash on hand to handle even a moderate unemployment spike. That debt was fully paid off in 2017, according to a report from the Illinois Comptroller.
Schuster said the rate is likely to increase again for businesses just months after the rates had fallen.
“Increasing unemployment insurance taxes can slow your recovery because it deters businesses from hiring right after a recession when you really want them to,” he said.
Cole Lauterbach Staff Reporter The Center Square
Re: Illinois’ Unemployment Fund is Drained. Who Pays to Fill It?
Old age must be getting to me because I thought this topic was up before. With the high unemployment the contribution to the unemployment tax fund will go up. Just another cost of doing business in Illinois passed to the small businessperson. Elections are about votes and in places like Granite City the free state army types outvote hard working taxpayers these days. Remember the days when Granite was the home to hard working individuals? Now it is home to the welfare class that lives on dollars taxed from hard workers redistributed to the welfare types. Why not call Nick Petrello, who voted against letting the people vote on another issue, and ask him about this? Big time Democrat Nick should have an answer...shouldn't he?
Re: Illinois’ Unemployment Fund is Drained. Who Pays to Fill It?
This big time Nick guy obviously knows what is best for the people. Perhaps he just doesnt want to risk a vote by the people fearing they may get confused and vote the wrong way, considering everything that is going on.
Keep in mind that the people need 6,259 pieces of mail telling them how to vote on an issue or who to vote for to assure they will not get confused. John Kerry as Climate Czar? Only Democrats could pick a guy with 6 houses, 12 cars, 2 yachts and a private jet, to tell you that YOU should take the bus to stop pollution.
Re: Illinois’ Unemployment Fund is Drained. Who Pays to Fill It?