Illinois businesses face tax increase due to unemployment insurance debt

According to a new story from the Wall Street Journal, Illinois is one of four Democratic-controlled states that refused to fully repay the federally borrowed money used to fund unemployment benefits despite the fact that each state had a budget surplus.

Illinois joins California, Connecticut and New York as states that chose to use budget surpluses for other priorities instead of paying back its debt to the federal government.

After the spring legislative session ended, Illinois still owed roughly $1.8 billion in its Unemployment Insurance (UI) Trust Fund even though the state increased its permanent operational budget by nearly $3 billion.

If that $1.8 billion debt, which is the second highest negative balance in the nation, isn’t repaid by Nov. 10, the federal government will begin to charge $21 per employee annually on all businesses within the state next year. Additionally, businesses will be forced to pay a still undetermined higher state tax to fund Illinois’ unemployment programs.

Senator Sue Rezin says that the Democrats’ decision to shortchange the UI Trust Fund is going to hurt businesses still struggling to recover from the Governor’s imposed shutdowns for a problem they didn’t create. She believes that state officials should have used this past year’s $16 billion of unexpected revenue, which included $8.1 billion from the federal American Rescue Plan Act (ARPA), to shore up the UI Trust Fund. Now, Illinois businesses are preparing to face the price for the state’s decision.

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