Legislation wipes out Ohio’s unemployment loan
CINCINNATI (WXIX) - Newly signed House Bill 168 will allow Ohio to use COVID-19 relief funds to pay off a loan it got from the federal government to help pay out unemployment benefits.
That loan amount has ballooned to a staggering $1,471,807,655.46.
“Paying off the debt is a good first step,” said President and CEO of the Ohio Chamber of Commerce Steve Stivers.
“Many small businesses have still not recovered from the pandemic,” explained Lt. Gov. Jon Husted. “Many more of them are having a difficult time hiring people, and many of them are paying increased wages, which is good for the employee. And all of this, the recovery would have been much harder if they would have to bear the burden of a tax on literally hiring people.”
If no action would have been taken, the state would have had to start paying interest on the loan in September.
That scenario played itself out during the Great Recession of 2008.
Ohio had to pay back more than $258 million in interest. That is because the fund that pays out benefits was deemed insolvent before the pandemic hit.
Meaning the state did not have enough money to pay out a year in unemployment benefits if a crisis were to happen.
States that have solvent unemployment compensation trust funds do not need to pay back interest on loans from the federal government for unemployment.
Paying off the loan does not solve the problem with Ohio’s trust fund, which has been deemed insolvent since 1974.
“I’m applauding the legislators,” Stivers said. “But that does not mean our unemployment crisis is over.”
For more than a year, FOX19 Now Investigates has examined the fund and the fight over how to fix it.
The money in the fund comes from employers.
There have been several options on the table over the years.
Those include taxing business owners more and reducing the number of benefits claimants receive.
Stivers also has an approach.
“We need to go to the next level and create incentives for people to get back to work sooner, and create some systems that help people that might need more assistance as far as training and things like that, and get it to them earlier so that they spend less time on unemployment,” Stivers said.
Below are the full details of HB 168:
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