(The Center Square) – The state’s unemployment debt related to the pandemic stands to eclipse the amount of debt from the Great Recession over a decade ago, and if it’s not addressed, taxpayers will also have to cover the interest costs.
None of the more than $8 billion the state of Illinois got from federal taxpayers is going to the state’s unemployment debt some have projected to be nearly that much.
Last month, before lawmakers left Springfield without using any of the federal funds to pay down the debt, state Rep. Jay Hoffman, D-Swansea, said they were still discussing how to best address the debt, including holding out for more federal taxpayer funds.
“It is a historic deficit,” Hoffman said. “Some estimate as high as $5 billion.”
But, some employer groups say the estimate if it’s not addressed will actually be closer to $8 billion.
You’ve already booked $3.1 [billion] from last year, you’re looking, it’s been projected about $4.7 [billions] for this year,” said Illinois Retail Merchants Association’s Rob Karr.
That’s a total of nearly $8 billion, Karr said. And, if there’s no relief from federal funds taxpayers sent the state, Illinois taxpayers will have to pay interest on that debt.
“We’ll have roughly $14 million I think between September and the end of December but the next year without any efforts to address it, you’re looking at the state paying general revenue funds of $50 million to $60 million to pay the interest,” Karr said.
Karr said there are only three ways to address it without paying down the debt: increasing taxes, decreasing benefits or both.
Illinois Manufacturers’ Association’s Mark Denzler said preliminary reports indicate there are possibly a lot of fraudulent claims. He said already-approved federal relief, not increased taxes or decreased benefits, should cover the costs.
“So when you’re talking about using ARPA dollars to come and help deal with that issue, it makes all the sense in the world,” Denzler said. “Why should employer taxes be funding benefits that went out fraudulently.”
Several other states have used the already released federal funds to pay down unemployment debt.
The state of Illinois’ Department of Employment Security says they’ve stopped hundreds of thousands of fraudulent claims, but they have provided a total amount of how much has been paid out in fraudulent claims.
Unemployed Illinois seeking to work through their claims, or employed persons challenging fraudulent claims, must work through IDES remotely because the agency’s offices remain closed. They’ve been closed for in-person service for more than a year. Gov. J.B. Pritzker has not provided a date for when the offices will be open other than to say “very soon.”