Mendoza seeks break for Illinois on pandemic loan interest | Illinois News
By JOHN O’CONNOR, AP Political Writer
SPRINGFIELD, Ill. (AP) — Illinois State Comptroller Susana Mendoza was among eight state financial officers Monday urging the Treasury Department to reinstate interest payment waivers on dozens of billions of dollars lent to states for unemployment rolls that exploded at the start of the covid19 pandemic.
Mendoza, a Democrat, was the lead signer on a letter sent to Treasury Secretary Janet Yellen saying the Sept. 6 waiver expiration has added to the burden states face in figuring out how to repay more than $39 billion. dollars lent since the tragic early days of the pandemic, when many states virtually shut down, putting hundreds of thousands out of work.
“Taxpayers shouldn’t be liable for interest just because the pandemic lasts longer than expected,” Mendoza said. “States are grappling with how best to replenish their COVID-depleted unemployment funds and they shouldn’t have to do it with the meter running.”
Illinois must repay $4.5 billion the federal government has advanced since the start of 2020 for skyrocketing unemployment benefits. But with the waiver ending in September, Illinois accrued $26.7 million in interest, of which $6.3 million was paid. The interest must be repaid by September 30, 2022 and could end up costing the state $100 million.
In the letter, the group argues that “the waiver deadline was initially determined assuming that the pandemic would likely be over and the economy and state governments would be in recovery mode.
“However, it is clear that this public health crisis is not over and that the benefit provided by this interest waiver is still necessary.”
The main irritant to the renewed interest is that most states are still trying to figure out how to repay billions of dollars in principal. The federal government prohibits reimbursement by ordinary state unemployment insurance funds, which are subsidized by employer contributions. So they have to find other parts of their budget to reduce the debt.
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