Business leader on unemployment deficit: ‘There is no way’ businesses can pay back
Skyrocketing unemployment during the pandemic drained the state’s unemployment insurance fund, causing a deficit that could reach $5 billion.
That has business leaders worried about tax increases.
The pandemic’s ensuing economic shutdown caused unemployment rates as high as 16% last year, upending the usual balance between revenue and benefit payouts into Illinois’ Unemployment Insurance Trust Fund, according to media reports..
The fund’s deficit is historically massive. Mark Grant, Illinois state director for the National Federation of Independent Business, says the scale of this deficit is beyond anything the state has dealt with before.
“To put it in perspective, that’s over twice what our UI debt was back during the 2008-2009 Great Recession – over twice,” he said.
It took employers several years to pay back the fund, Grant says, and that was with bonding and other measures to make it more affordable.
“There is no way Illinois employers can afford to pay back four and a half to five billion dollars,” he said.
Stakeholders and lawmakers are scratching their heads over what to do. Past solutions involved tax hikes and reduced benefits, but some say this time that’s not going to be enough, Capitol News Illinois reported.
Grant says they are suggesting a different solution.
“NFIB along with several other major business associations are asking the Pritzker administration to use four and a half to five billion of the ARPA funds – the recovery funds – to pay this back instead of laying it all on top of employers.”
Illinois hasn’t seen a big economic turnaround yet, Grant said, and this solution would avoid burdening employers further as they try to recover.
“Adding all this extra unemployment tax debt on small business would really harm their ability to recover,” he said.
Using American Rescue Plan Act (ARPA) funds is an idea Republican lawmakers are favoring as well, the Capitol News article stated.
So far, the Pritzker administration has simply alluded to a hope of further federal assistance.
Grant noted more federal aid was unlikely given the large chunk they just handed out, and which Illinois has not fully appropriated.
This article was originally posted on Business leader on unemployment deficit: ‘There is no way’ businesses can pay back