Economic analysts and lawmakers are speaking out against a plan to pay down the state’s unemployment debt, claiming it could raise taxes.
Earlier this week, Gov. J.B. Pritzker announced the state would appropriate $1.8 billion to cover the state’s remaining $1.3 billion unemployment debt and then some.
The remaining $450 million will be placed into the trust fund from other state funds as an interest-free loan. Then, according to a news release, funds will be deposited directly into the state’s rainy-day fund as the loan is repaid over the next ten years.
If the loan isn’t paid off, taxpayers pay continued interest and it could lead to increased taxes on employers and decreased benefits for the unemployed.
State lawmakers Thursday, the final day of veto session for the calendar year, began the process of appropriating the funds.
Pritzker said earlier this week the plan will save taxpayer money.
“This bipartisan agreement eliminates the final portion of the $4.5 billion debt forced upon our state during the pandemic and saves Illinois businesses and taxpayers hundreds of millions over the next decade,” Pritzker said.
Others believe the plan will result in businesses and Illinois residents owing more taxes.
Ted Dabrowski, president of Wirepoints, blamed Pritzker for the debt and said it should have been paid off sooner.
“Governor Pritzker passed some of the strictest lockdowns in the country, so the unemployment problem is largely on him,” Dabrowski said. “It is the right thing to do to put the money in. The question is how much more tax or rate hikes the companies in this state will have to face.”
Another issue discussed on the Senate floor Thursday was whether any other spending that does not pertain to the unemployment trust fund debt would be added.
Senate President Don Harmon, D-Oak Park, said that would not happen.
“This is an appropriation bill that is limited to only appropriations to satisfy our obligations within our unemployment insurance trust fund,” Harmon said on the floor.
State Rep. Adam Niemerg, R-Dieterich, released a statement criticizing the governor.
“The reality is the fund is insolvent because JB Pritzker locked down our economy,” Niemerg said. “The system had more claims than it could handle, and the federal government had to intervene and loan money to pay the claims. Instead of playing games, we should have paid back the loan earlier this year. Once again, the hard-working people of this state are paying the price for the mismanagement of our state.”
The final plan is expected to be approved during the final session days early next month, just before the end of the current 102nd General Assembly and the beginning of the 103rd General Assembly Jan. 11.
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