Employers can take some comfort in knowing the state acted in addressing the remaining Unemployment Insurance (IU) Trust Fund loan balance during the recent veto session. This debt stood in the way of allowing employers to understand their pending expenses – as this could have fallen on employers to pick up the residual debt through increased taxes. The UI loan helped the state of Illinois provide financial assistance to individuals unemployed during the pandemic. During the state’s recent veto session, a tax structure was agreed upon to repay this federal loan that would provide greater stability and predictability for employers on the taxes they pay to provide for benefits in Illinois for at least the next 5 years.
In the Spring Session, the Illinois General Assembly took partial action to address paying back the UI loan balance, but stopped short, leaving approximately $1.4 billion dollars owed. During the December veto session, labor unions, business leaders, the four caucuses, and the governor’s administration reached a bipartisan solution to resolve this shortfall and meet the needs of our business community. The Illinois Chamber of Commerce has provided a useful overview of what the agreement encompasses:
- The 1.3B still owed to the government is being paid off, thus eliminating our debt. We will still have a loss of 3/10ths of 1% credit. All employers will pay an additional $21 to all employees with earnings of seven thousand dollars or more due to us not getting the debt paid off prior to the due date.
- The target trust fund balance is now going from 1B to 1.75B, which leads to greater stability and helps avoid debt in the future.
- We also will receive a 450M zero-interest loan to help boost the trust fund balance.
Feeling protected allows employers to focus on continued post-pandemic recovery and while this is not a perfect solution, it is a bipartisan demonstration of wanting to bring continual support to our business community. More information on the agreement can be found through the State of Illinois’ press release at: https://www.illinois.gov/news/press-release.25744.html