Mendoza seeks break for Illinois on pandemic loan interest
Illinois State Comptroller Susana Mendoza was among eight state financial officers who urged the Treasury Department on Monday to reinstate interest payment waivers on tens of billions of dollars loaned to States for unemployment lists that exploded at the start of the COVID-19 pandemic.
Mendoza, a Democrat, was the main signatory of a letter sent to Treasury Secretary Janet Yellen, claiming that the expiration of the waiver on September 6 added to the burden states face in determining how to repay the more than $ 39 billion. dollars loaned since the pandemic’s tragic onset, when many states virtually closed their doors, putting hundreds of thousands of people to work.
âTaxpayers shouldn’t be paying interest just because the pandemic is going on longer than expected,â Mendoza said. âStates are wondering 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 that the federal government has advanced since early 2020 for soaring 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 is due to be repaid by September 30, 2022 and could end up costing the state $ 100 million.
CFOs from Colorado, Connecticut, New Jersey, New York, Massachusetts, Minnesota and Pennsylvania joined Mendoza in signing the letter. All are led by Democratic governors except Massachusetts, but a press release from Mendoza said she had summoned the leaders of the hardest-hit states representing 75 million people.
In the letter, the group maintains that âthe waiver timeframe was initially determined on the assumption that the pandemic would likely be over and the economy and state governments would be in recovery mode.
“However, it is quite clear to see that this public health crisis is not over, and the benefit of this waiver of interest is still needed.”
The main irritant in the face of renewed interest is that most states are still trying to figure out how to repay billions of dollars in principal. The federal government prohibits repayment of regular state unemployment trust funds, which are subsidized by an employer assessment. They must therefore find other parts of their budgets to pay off the debt.
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