As a lawmaker, one of my top priorities each legislative session is to advance policies that help businesses maintain and expand their operations in our state. Keeping to this commitment, I was proud to support adding an early payoff option to our federal unemployment loan in the state’s budget. I am excited to share that the State Budget Committee has recently authorized a $250 million repayment of the federal loan prior to the Nov. 10 deadline. By paying off the loan early, Hoosier employers will not have to pay $327 million in federal unemployment penalties.
This savings allows Hoosier businesses to inject those dollars back into our economy. In addition, the state is utilizing existing resources, so taxpayers will not have to pick up the tab for the early repayment. These efforts to put the UI Trust Fund on a path to solvency were championed by House Republicans and represent a win-win solution for both Hoosier businesses and workers.
First established in 1938, UI programs were created to lessen the impact of an economic downturn for unemployed workers. Each quarter, premiums are collected from employers and put into the trust fund so unemployment benefits may be paid to those eligible. Indiana’s unemployment insurance system has endured major changes and when the recession hit in 2008, we were forced to borrow from the federal government to keep the UI Trust Fund afloat.
As the state’s loan balance continued to grow, peaking at over $2 billion, Hoosier businesses started to see increases in their Federal Unemployment Insurance Tax (FUTA). Assessed annually as tax penalties, the revenue generated from the increased FUTA went directly to the balance of the loan. In 2011, House Republicans passed a plan to reform the UI Trust Fund in order to achieve a structural balance and provide a projected pay off date of 2018. However, our commitment to fiscal integrity allowed for the early payoff of this loan
Although Indiana has outpaced the nation in private-sector growth and has seen record lows in unemployment, we must continue to protect our workers in the event of a future economic downturn. I believe our legislative actions regarding unemployment insurance should be carried out with prudence. That is why I am pleased the State Budget Committee decided to move forward with our plan to repay the federal unemployment loan.
If you have any questions about unemployment insurance or any other issues facing our community, I encourage you to contact my office by calling 317-232-9815 or emailing email@example.com.
Rep. Ziemke (R-Batesville) represents portions of Rush, Fayette, Franklin, Ripley and Decatur counties.