Interest stacks up as negotiations on paying billions in unemployment debt continue

[February 04, 2022]  By Greg Bishop

(The Center Square) – One of the big items the governor neglected to address in his State of the State and Budget Address Wednesday is the state’s $4.5 billion in unemployment debt.

“The bill backlog that at its height reached nearly $17 billion and the $1.5 billion borrowed from the state treasury have now been paid down,” Gov. J.B. Pritzker said. “I believe in paying our debts.”

Pritzker laid out a plan to pay more than required for the state's underfunded pensions systems, infuse hundreds of millions into the state’s depleted rainy day fund, and increase spending elsewhere. His budget plan would spend nearly $4 billion more than the current year for a total of $45.5 billion in general operating expenses.

Not mentioned during his speech is how to deal with the state’s $4.5 billion unemployment trust fund debt that accumulated during the governor’s economic restrictions on businesses in response to the COVID-19 pandemic.

“I’d like it to be paid back as in yesterday because I hate paying interest payments and the sooner we can stop paying interest payments and just get the job done here the better for Illinois,” Illinois Comptroller Susana Mendoza told The Center Square.

Last year, Mendoza requested the federal government waive the interest payments on the debt. The outstanding debt is costing taxpayers tens of millions of dollars.

“I believe the interest could amount to about $100 million over the course of 2022 if we don’t get something resolved,” Illinois Manufacturers’ Association President and CEO Mark Denzler told WMAY.

While he couldn't give details, Denzler said negotiations over paying the debt between the governor’s office, legislative leaders and business and labor groups continue, one thing has been made clear.

“The business community has called for using federal dollars for a long time now,” Denzler said. “Thirty-eight states across the county have done that. Illinois is one of only 10 states I believe that still have an unemployment insurance debt.”

Illinois has billions left over from federal COVID-19 relief.

If the unemployment trust fund debt is not addressed, taxes would increase on employers and benefits would decrease for the unemployed. A plan expected before the end of session, April 8.

State officials have not yet announced how much fraud has hit Illinois’ unemployment fund.