Businesses Flipping Bill for State Unemployment Debt

by Pamela M. Prah, Stateline

Employers in 20 states will have to shell out more in taxes next year as a penalty for the states not paying back federal loans that kept unemployment programs afloat during the recession.

Altogether, states still owe$37.6 billion to the feds that they borrowed when their unemployment insurance trust funds sank to zero. Most states have dealt with the problem by raising state payroll taxes on employers, making benefits to workers less generous; or a combination of the two.

A handful, though, have opted to issue bonds. Idaho did it earlier this year, and Texas did it last year. And just this month, Illinois lawmakers approved legislation allowing the state to issue bonds to pay back the $2 billion the state owes the federal government for unemployment relief. Governor Pat Quinn has applauded the UI package and has indicated he will sign the measure. The state figures it will get an interest rate lower than the 4 percent it would have to pay the federal government, saving the state and businesses millions of dollars.

Employers in these 20 states will face an increased federal unemployment tax in 2012. The amount each state still owes the federal government is in parentheses.

Arkansas ($330 million) 
California ($9.2 billion) 
Connecticut ($809 million) 
Florida ($1.7 billion) 
Georgia ($721 million) 
Illinois ($1.9 billion) 
Indiana ($1.9 billion) 
Kentucky ($949 million) 
Michigan ($3.1 billion) 
Minnesota ($94 million) 
Missouri ($725 million) 
North Carolina ($2.5 billion) 
Nevada ($706 million)
New Jersey ($1.2 billion) 
New York ($3 billion) 
Ohio ($2.3 billion) 
Pennsylvania ($3.1 billion) 
Rhode Island ($199 million) 
Virginia ($243 million) 
Wisconsin ($1.1 billion)

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The staff of Politic365.

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