House Democrats are using a portion of the state’s remaining federal bailout dollars to help dig the state’s unemployment insurance trust fund out of a hole estimated to be $4.5 billion or higher.

But Republicans say Democrats aren’t doing enough to close the gap in funding and are opening the door to higher premium costs for employers.

More from Jerry Nowicki of Capitol News Illinois:

The House on Wednesday advanced a measure to allocate $2.7 billion in federal American Rescue Plan Act funds to pay down more than half of Illinois' outstanding $4.5 billion Unemployment Insurance Trust Fund debt.

The measure, an amendment to Senate Bill 2803, also included over $1 billion in general revenue fund spending to pay down other state debts.

Debate lasted nearly an hour and became contentious at times as the bill passed 68-43 with only Democratic support. The Senate was expected to take it up when they returned Thursday.

The trust fund is the pool of money paid into by businesses that funds unemployment claims. The debt accrued as the state borrowed from the federal government at the height of the pandemic to keep the trust fund solvent amid an unprecedented crush of claims.

When states accrue trust fund debt, the ways to pay it down have historically included raising insurance premium rates paid by employers, decreasing unemployment benefits, or seeing a new influx of cash, such as federal, state or private funds.

Rep. Jay Hoffman, a Swansea Democrat who is a lead House negotiator on unemployment issues, said discussions continue with business and labor interests on addressing the remaining $1.8 billion. But at least $2.5 billion was needed to keep those negotiations moving forward.

“This is an agreed bill process. Business and labor have to agree or we're not going to move the bill,” he said of ongoing negotiations to pay down the $1.8 billion. “This was a budgetary measure in order to make it easier on the agreed bill process.”

The governor’s office held closed-door meetings throughout the day to discuss the debt retirement proposal. A late amendment increased the previously planned allocation to the trust fund from $2 billion to the $2.7 billion sum.

But Republicans urged full repayment of the $4.5 billion, noting that about $6.9 billion in ARPA funds remains unspent, even if more than that has been promised in previous spending plans that passed the General Assembly.

Before the pandemic, the state had $1.2 billion in its trust fund, Rep. Tom Demmer, R-Dixon, said in a floor speech. Republicans urged the state to use ARPA funds to replenish that amount as well.

“So you might ask what happens when our unemployment insurance trust fund is in debt?” Demmer said. “Two things: One, a major tax increase on every job in the state of Illinois; and two, a benefit reduction for every worker in the state of Illinois. It's a lose-lose scenario. Taxes go up; benefits go down because the fund is in debt.”

Pritzker statement:

“Illinois is putting our fiscal house in order and paying off our debt. I applaud House Democrats for prioritizing legislation that will use our resources in the most fiscally responsible way: SB2803 will pay down more than $4.1 billion in debt. I especially appreciate the tireless work to dedicate additional revenues to one-time efforts that will produce a stronger budget for years to come, and I extend my gratitude in particular to Leaders Greg Harris, Marcus Evans and Jay Hoffman and Reps. Will Davis, Robyn Gabel, Lisa Hernandez and Michael Zalewski for advancing this priority.

I’m disappointed that Republicans are putting their politics ahead of fiscal responsibility while Democrats in the General Assembly are taking the lead to put our fiscal house in order.”

Richard Irvin statement:

"After trying to pass the largest tax hike in our state's history, the Tax-Hiker-In-Chief is trying once more to tax Illinois families and businesses out of this state. Thanks to his reckless disregard for shoring up the Unemployment Insurance Trust Fund, Illinois employers and workers will have to make up the difference, resulting in billions of dollars in tax increases and benefit cuts. Tonight's vote is yet another example as to why voters don't trust Pritzker and Springfield politicians to do anything right, and exactly why we must take our state back."

Illinois workers will see cuts to their unemployment benefits, and the fund will continue to accrue millions in interest charges. Many other states across the country used federal stimulus funds to repay loans to their unemployment systems, but under Pritzker’s lead, Illinois spent those dollars elsewhere. Despite warnings and urging from lawmakers to utilize federal ARPA money to replenish the fund, he instead willfully chose to use the money for election-year gimmickry and increased state spending that will now result in raising taxes on the residents of Illinois.”

Sen. Sue Rezin (R-Morris) & Rep. Ryan Spain (R-Peoria):

“Illinois Democrats had a simple choice today, they could use ARPA funding to pay off the unemployment insurance trust fund debt, or they could impose a tax hike on jobs. As they have done time and time again, they chose the tax hike. The only way to avoid a tax increase on jobs and cuts to unemployment benefits is to fully pay off the debt our state owes to the federal government.

“Choosing to leave a $1.8 billion hole in this critical social safety net program – with no plan to pay back the remaining balance – leaves taxpayers on the hook for future increases and does nothing to stabilize the fund in case of another emergency. Instead of spending these federal funds on a billion dollars in democrat pork projects, Illinois should be paying off our debt as many other states have done to avoid a tax hike on jobs and cuts to unemployment benefits.”

Rep. Tim Butler (R-Springfield):

“For months, we’ve been warning Democrats that we have to pay off the debt owed to the federal government in the Unemployment Insurance Trust Fund or risk a tax hike on jobs and cuts to future unemployment benefits. This could have been done by using ARPA and CARES funds, but once again Democrats have chosen to use that money for pet projects, leaving the trust fund vulnerable to another emergency and putting the burden on taxpayers. Many other states faced similar unemployment insurance deficits, but took the responsible route to use available federal COVID-19 relief to replenish their funds. Illinois’ failure to do the same is another example of serious financial malpractice by the Governor and state Democrats that could have easily been avoided.”

Patrick Pfingsten

@pfingsten1

patrick@theillinoize.com