Democrats herald partially paying down unemployment debt; Republicans warn of tax increases, benefit cuts to come

[March 25, 2022]  By Greg Bishop | The Center Square

(The Center Square) – Business and labor negotiators are staring down the barrel of possible tax increases on job creators and benefit reductions for the unemployed after Illinois Democrats approved a measure to partially pay down the unemployment trust fund debt.

Gov. J.B. Pritzker is expected to sign a measure that allocates more than $3 billion to partially pay down some of the state’s debt. Republicans opposed the measure saying much more debt should have been paid off.

Late Wednesday, the House passed a measure to spend $2.7 billion of federal tax funds on the state’s $4.5 billion unemployment insurance debt. The measure passed without minority Republican support.

The same went for passage of the measure Thursday in the Senate.

Pritzker said he’ll sign the partial payment as soon as the bill hits his desk, even as early as Thursday evening, saying it will be “between labor and business to decide how we’re going to pay off any deficit that exists.”

State Sen. Chapin Rose, R-Mahomet, said Republicans support paying down debt, but they want to pay down the whole debt. Not doing so could lead to tax increases on businesses, benefit cuts for the unemployed and continued interest payments that taxpayers would be responsible for.
 

“They’ve had $16 billion [of federal COVID-19 tax funds] over the last two years and they couldn’t fix this,” Rose said during a news conference.

It’s now up to business and labor groups to negotiate how to plug the gap.

“We’re hopeful that negotiations will continue to resolve the remaining balance of this unprecedented deficit,” The Joint Employers group said in a statement Thursday evening.

State Rep. Jay Hoffman, D-Swansea, acknowledged what happened with a similar shortfall more than a decade ago after the unemployment increases during the Great Recession.

“In 2011, the employers took the entire responsibility to pay off the bonds and there weren’t any benefit decreases,” Hoffman said.

State Sen. Win Stoller said if the balance isn’t paid by this summer, there'll be tax increases on job creators and benefit reductions for the unemployed.

“Five hundred million [dollars] of increased taxes and $500 million of benefit cuts, thinking that that’s going to drive the parties to the table and negotiate this out,” Stoller said. “So that is what is planned to happen unless something else changes it.”

Republicans said there’s still time to use remaining federal tax funds to pay off the rest of the UI debt and even add $1 billion more to make the fund solvent.

Senate Bill 2803 also included supplemental appropriations to pay hundreds of millions of dollars into the more than $140 billion in underfunded pensions, old medical bills and the beleaguered college savings program.

Greg Bishop reports on Illinois government and other issues for The Center Square. Bishop has years of award-winning broadcast experience and hosts the WMAY Morning Newsfeed out of Springfield.