During the interim I am able to better communicate with all of you in the district and learn about issues affecting our community. Recently, after talking to small business owners there was a reoccurring concern regarding unemployment insurance taxes. Over the past 15 years, Indiana’s Unemployment Insurance Trust Fund (UI Trust Fund) has undergone financial challenges.
On Friday, the State Budget Committee authorized early repayment of the outstanding federal loan to Indiana’s UI Trust Fund. House Republicans championed this option and authorized it in the biennial budget passed earlier this year. Repaying the loan will eliminate the federal unemployment tax (FUTA) penalties currently paid by Hoosier employers and result in saving them $327 million. The transfer will be funded by future state unemployment tax revenue and will not cost Hoosier taxpayers. Unemployment benefits will remain unaffected.
Between 2000 and 2011, the UI Trust Fund went from a positive balance of nearly $2 billion to owing the federal government more than $2 billion. This began in 2001 when the Legislature increased benefits but reduced unemployment taxes. Already on an unsound financial footing, the UI Trust Fund went bankrupt when the recession hit in 2008. Indiana was forced to borrow from the federal government to pay the ballooning number of unemployment insurance claimants.
In 2011, House Republicans enacted a plan that put the UI Trust Fund on a path to solvency. We addressed taxes, benefits and eligibility. It was estimated the loan would be paid off by 2018, however, Indiana exceeded expectations and will fully repay the debt at the end of this month.
This is a win-win situation for Hoosier employers, workers and taxpayers. I am proud our House Republican caucus found a fiscally responsible solution to strengthen this program and lessen the burden on our local small businesses.
Rep. Arnold (R-Leavenworth) represents portions of Spencer, Dubois, Perry, Crawford and Orange counties.