Illinois lawmaker proposes to extend waiver to states on unemployment loan interest
Illinois, California, Colorado, Connecticut, Massachusetts, Minnesota, New Jersey, New York and Pennsylvania and the Virgin Islands together have outstanding balances of $39.4 billion in so-called advances for pay unemployment benefits. Since September, they have accrued $315.8 million in interest.
“As the pandemic continues, these states continue to require financial assistance to enhance their recovery during the dual economic and public health crises,” Davis said in an emailed statement. “If required to pay the interest, states will be forced to either increase employers’ unemployment contributions or divert state resources that could be used for economic recovery.”
Still, the waiver extension would come at a time when states are teeming with cash as they take extraordinary federal stimulus and see an economy rebound helping to swell balance sheets.
Davis said he was working with U.S. Representative Brad Schneider, D-Deerfield, on the legislation. Illinois owes the federal government about $4.5 billion after draining reserves from its unemployment trust fund during the pandemic. Since September, the state has racked up nearly $33 million.
State financial officers from eight states lobbied for the reinstatement of the waiver, sending a joint letter in December to Treasury Secretary Janet Yellen asking for her support. They pointed out at the time that the expiration of the waiver was initially determined on the assumption that the pandemic was likely to be over and the economy would recover.
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