Illinois lawmakers agree to $2.7 billion for the state’s indebted unemployment fund

State Capitol lawmakers have been working to find a solution to a $4.5 billion problem. The state’s Unemployment Insurance Trust Fund, the pool of money used to pay unemployment insurance benefits, incurred $4.5 billion in debt during the pandemic.

The Senate on Thursday gave final approval to pay out $2.7 billion in American Rescue Plan Act funds from the federal government to fix the problem, though there’s still $1.8 billion in the hole. .

Funding comes from a bill, SB 2803sponsored by Rep. Greg HarrisD-Chicago and Sen. Linda Holmes, D-Aurora. Both hold leadership positions in the budgetary and financial process of the General Assembly.

The bill passed the House of Representatives by a vote of 68 to 43 on Wednesday night with only Democratic support. It passed the Senate on Thursday afternoon by a vote of 39 to 16. It now goes to the governor for final approval.

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Heated partisan arguments over the bill were common, with some lawmakers breaking their usual decorum to vent their frustration.

“I wish to be recorded as a hell no,” Sen said. Terri BryantR-Murphysboro, after a technical problem prevented the initial registration of his vote.

The bill, in addition to allocating $2.7 billion of ARPA funds to the Unemployment Insurance Trust Fund, also allocates $898 million to unpaid group health insurance bills, $280 million to unfunded liabilities of the College Illinois program and $300 million to state reimbursement. pension commitments beyond the legal requirement.

The $1.4 billion outside the unemployment insurance trust fund would come from the general revenue fund, according to Harris.

These programs are all part of Governor JB Pritzker’s fiscal plan for the state and he characterized the spending as a step toward fiscal responsibility.

“Illinois is getting our finances in order and paying down our debt,” Pritzker said in a statement late Wednesday. “I commend House Democrats for prioritizing legislation that will use our resources in the most fiscally responsible way.”

Democrats also dismissed criticism from Republicans that the spending plan would lead to higher taxes.

“What’s before you today is not to raise premiums or cut benefits,” said Rep. Carol Ammons, D-Urbana.

Despite the characterizations of Democrats, Republicans and independent groups have questioned the long-term plan for the unemployment insurance trust fund. Federal law requires that the trust fund be fully funded.

“Either the state has to put money in or employers will have to,” said Carol Portman, president of the Illinois Taxpayers’ Federation, a nonpartisan think tank that studies and advocates for issues related to Taxation.

The Unemployment Insurance Trust Fund is typically paid by tax to Illinois business owners, with businesses that have a history of laying off employees, increasing the use of the fund, and paying an amount higher than some other companies, according to Portman.

The $1.8 billion debt that the state will still carry if the bill is signed will be repaid, although the method is not yet finalized. Harris said the funds “will likely come from changes in premiums, benefits or bond issues and repayments over time.”

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States across the country have struggled with indebted unemployment insurance funds during the pandemic due to record levels of unemployment.

Republicans have used the fact that other states have fully funded their unemployment insurance trust funds to criticize the Democrats’ spending plan.

“Texas used nearly half of its ARPA funds, $7.2 billion, to cover the shortfall in its unemployment trust fund,” the senator said. Earn StollerR—Germantown Hills.

House Republicans also criticized the plan.

“It’s a lose-lose scenario,” Rep. Tom Demer, R-Dixon. “Taxes go up, benefits go down because the fund is in debt.”

The state received just over $8.1 billion in funding through ARPA, according to reports from the Governor’s Office of Management and Budget. The Governor’s Budget proposed using these funds in several places, and state lawmakers have already allocated

If the governor signs SB 2803, there would be $800 million of the original $8.1 billion unallocated, according to GOMB spokeswoman Carol Knowles.

Other ARPA funds went to dozens of state and local government programs, according to GOMB’s latest monthly report. These include $5.06 billion for schools, $566 million for housing assistance programs, $497 million for child care block grants.

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ARPA funds were also used for smaller projects, such as $424 million for statewide broadband and sewer infrastructure projects, $122 million for Lake County for regional stormwater management projects, $4 million for legal assistance to undocumented Illinois residents who are part of the Deferred Action for Childhood Arrivals program, $14 million in grants to transit systems and $100,000 to the “Black and Gold Initiative,” a mentoring and violence prevention program that is part of the Illinois State Board of Education, among many other projects.

The use of ARPA funds drew heavy criticism from Republicans, who said the funds were intended for partisan issues.

“This bill will raise taxes,” said Rep. Tim Butler, R-Springfield. “This bill pays for the favorite projects of the Democrats.”

In response to all of this criticism, Senate Speaker Don Harmon D-Oak Park stepped out just before the final vote to address the Senate.

“This is what fiscal responsibility looks like,” Harmon said.

Contact Andrew Adams: [email protected]; (312)-291-1417; twitter.com/drewjayadams.

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