Lawmakers vote to direct $2.7 billion toward $4.5 billion unemployment deficit
SPRINGFIELD - Illinois lawmakers this week advanced a measure to allocate $2.7 billion in federal American Rescue Plan Act funds to pay down more than half of the state's outstanding $4.5 billion Unemployment Insurance Trust Fund debt.
The measure, an amendment to Senate Bill 2803, also included over $1.4 billion in general revenue fund spending to pay down other state debts.
Debate lasted nearly an hour in the House Wednesday as the bill passed 68-43 with only Democratic support. The Senate passed it Thursday on a 39-16 vote, also with only Democratic support.
Gov. J.B. Pritzker said at a news conference Thursday that he will sign the bill as soon as it hits his desk.
"Every Republican voted against paying down our state's debts," Pritzker said at the news conference in his office. "Clearly, they've decided that because it's an election year, they're willing to put politics ahead of the people of Illinois."
Republicans, meanwhile, said that not allocating greater funding to the trust fund deficit will force some combination of tax increases on employers or benefit cuts to those on unemployment as a solution to paying down the remaining $1.8 billion in trust fund debt.
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.
"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."
Hoffman said that in 2011 after the Great Recession, the state went to the private bond market to pay down a $2.3 billion trust fund deficit and dedicated a revenue stream from increased employer premiums to pay it down. On Thursday, Hoffman said employers "took the entire responsibility to pay off the bonds" in 2011, and there were no benefit decreases.
In a July email to Capitol News Illinois, Illinois Retail Merchants Association President and CEO Rob Karr - a negotiator on behalf of business in 2011 and currently - said the only concession from labor at the time was agreeing to a slight decrease to the dependent child allowance for unemployed individuals.
The Illinois Retail Merchants Association is part of a group called the Joint Employers, which also includes the Illinois Manufacturers' Association, Illinois Chamber of Commerce, Chicagoland Chamber of Commerce, the National Federation of Independent Businesses of Illinois, and the Associated General Contractors of Illinois.
They issued this statement regarding the ongoing negotiations: "Today's vote will inject $2.7 billion from the American Rescue Plan into the Illinois Unemployment Insurance Trust Fund. Illinois employers appreciate the governor and members of the General Assembly for taking this positive step in addressing the massive $4.5 billion in outstanding debt. We're hopeful that negotiations will continue to resolve the remaining balance of this unprecedented deficit."
As of Wednesday, the state had already accrued $41 million of interest on the trust fund debt, and it continues to accrue at a rate of 1.59%. That interest is due to be paid by Sept. 30, according to the U.S. Treasury.
GOP lawmakers argued that Democrats could have staved off some of that interest accrual by acting earlier. When lawmakers passed a budget last year, Sen. Chapin Rose of Mahomet other Republicans called out the majority party for not acting on the trust fund deficit.
"When I brought this up a year ago, and I said you are failing to take action, you are going to make this worse, and you're going to hurt people," he said Thursday. "And here we are a year later. That's exactly what's happened."