Business, Labor Groups Agree on $1.8B Unemployment Debt Plan

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Business and labor groups have agreed on a plan to erase a $1.8 billion debt in the Unemployment Insurance Trust Fund. Gov. J.B. Pritzker said Tuesday that a state budget surplus will pay off the debt. That includes $1.36 billion owed to the federal government. That money was borrowed during the COVID-19 pandemic when closed shops sent unemployment to levels not seen in 40 years. Another $450 million will go in the form of an interest-free loan which unemployment taxes on businesses will repay over the next 10 years. As businesses pay that back, money will be deposited into the state’s rainy day fund to help ensure stability during an economic downturn.

Democrats who control the General Assembly agreed to use federal pandemic-relief money to reduce that deficit by $2.7 billion last spring. Republicans urged that the federal money pay off the whole bill to spare businesses from having to pay the taxes.

“Following years of disruption and other challenges, it would have been an added burden many employers would have been unable to bear,” he said. And the amount of an employee's wages which may be taxed for unemployment insurance would be increased. Employers currently pay taxes on up to $12,600 in wages, but that base will increase 2.4% annually for five years, Devaney said.

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