Monday, Jan. 23, 2022
SPRINGFIELD – Immediately after receiving word that Governor Pritzker had signed the budget bill (SB 2801) authorizing repayment of the remainder of the COVID-19 unemployment insurance Comptroller Susana A. Mendoza Monday began making the transfers of $1.37 billion so that IDES could pay the federal government.
The payoff saves Illinois $20 million in interest costs that would have been due in September had the loan not been paid off. Other states such as California, New York and Connecticut have yet to pay off their COVID-19 unemployment insurance loans.
In preparation for this day coming, Comptroller Mendoza had directed staff to begin setting money aside so the check could be sent the moment Governor Pritzker signed the bill passed by the General Assembly in recent days and save on interest.
“We have been preparing for this day to pay back the remainder of the COVID-19 unemployment insurance loan and stop the interest-meter running for taxpayers,” Comptroller Mendoza said. “This is one more sign Illinois is earning the upgrades from the bond-rating agencies who see the work we have done to fix Illinois’ finances.”
The agreement announced by Governor Pritzker in November between business and labor negotiators, bipartisan members of the General Assembly and the administration to use $1.37 billion in better-than-expected state revenues to pay off the remainder of the $4.5 billion loan eliminated the need to ask state businesses to pay more into the fund or to cut unemployment benefits for state workers.
The COVID-19 pandemic in 2020 caused unprecedented unemployment claims as businesses shut down, patrons stayed home from restaurants and theaters and business owners had to lay off workers. Illinois, like other states, exhausted its reserves of funding for unemployment claims and needed advances from the federal government.
The agreement will contribute more than $1.8 billion in state funds to the unemployment insurance trust fund. In addition to paying off the $1.37 billion to the federal government, an additional $450 million will be placed into the trust fund from state funds as an interest-free loan to help strengthen the fund. As the loan is repaid over the next 10 years, funds will be deposited directly into the state’s Rainy Day Fund.
“Any chance the state has to contribute more money to the Rainy Day Fund, we should take,” Comptroller Mendoza said. “Catching up to other states’ Rainy Day reserves signals to the bond-rating agencies how serious Illinois is about fixing our finances. That leads to credit upgrades, which means lower costs for taxpayers.”