Deal Reached to Plug Hole in Unemployment Trust Fund
Gov. JB Pritzker announces a deal on unemployment insurance at the Statehouse Tuesday. (Photo: Capitol News Illinois)
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Governor JB Pritzker, legislative leaders, unions, and business announced an agreed bill Tuesday to wipe out the remaining $1.4 billion in federal loans used to prop up the state’s unemployment insurance fund during the COVID-19 pandemic.
The state borrowed $4.5 billion from the federal government to provide unemployment insurance payments at the height of the pandemic.
The announcement lays out the use of $1.8 billion in state funds to pay off the $1.36 billion in loans. It also gives a $450 million interest-free cash infusion into the trust fund. As the Department of Employment Security pays off the loan from the state coffers, the money will be deposited in the state’s rainy day fund.
The Commission on Government Forecasting and Accountability (COGFA) reported earlier this month a projection that state revenue would be $4.9 billion higher than what was budgeted by the legislature in April for the fiscal year that began July 1. (COGFA, which is bi-partisan and doesn’t report to the executive branch, is actually estimating a billion more in revenue during the current fiscal year than the Governor’s own Office of Management and Budget.)
The deal was made though the long-standing “agreed bill” tradition in Springfield that brings labor and business to the table and both sides sign off on a final package.
“The pandemic created unprecedented challenges for unemployment insurance systems across the nation and without action, Illinois employers would have faced crushing tax increases in the midst of other challenges,” said Rob Karr, President and CEO of the Illinois Retail Merchants Association. “This agreement will ease that pressure and provide greater stability for our system, while also ensuring employers pay over $900 million less in taxes over the next five years than they otherwise would have.”
Labor credited the agreed bill process for the deal.
“This agreed bill is another example of bold actions taken by Governor Pritzker and the General Assembly to strengthen the state’s financial position and create a friendly environment for business to thrive in Illinois while also protecting the most vulnerable workers,” said Pat Devaney of the Illinois AFL-CIO. He called the UI Trust Fund a “safety net” for workers.
The deal is expected to get legislative approval this week.
