Tuesday, December 14, 2021
SPRINGFIELD — State financial officers are asking the federal government to reinstate the waiver on interest being charged for fund advances given to the states to cover COVID-19 unemployment insurance.
These advances were provided to the states interest free so that unemployment benefits could be made without disruption during the worst phase of the COVID-19 pandemic. The interest waiver on these advances expired Sept. 6, 2021.
“Taxpayers should not be on the hook for interest just because the pandemic is lasting longer than projected,” Illinois Comptroller Susana Mendoza said. “States are wrestling with how best to replenish their COVID-depleted unemployment funds and they should not have to do that with the meter running.”
Illinois’ interest tab is nearly $20 million as of today. That could reach more than $100 million if left unpaid for a year.
State officers, representing more than 75 million residents from New York, Colorado, Pennsylvania, Connecticut, New Jersey, Massachusetts and Minnesota joined Comptroller Mendoza in cosigning the attached letter to U.S. Treasury Secretary, Janet Yellen, seeking the administration’s support for reinstating the interest waiver.
“We believe the waiver deadline was originally determined under the assumption that the pandemic would likely be over and that the economy and state governments would be in recovery mode,” the signatories wrote. “However, it is quite plain to see that this public health crisis is not over, and the benefit provided by this interest waiver is still necessary.”
They emphasized that the pandemic is clearly not over and that states that are having to pay interest on more than $39 billion on federal advancements need more time to figure out how to address repayment of these advances.
“The cost of covering this federal initiative to extend unemployment benefits during the pandemic should not fall completely on the shoulders of businesses and labor,” said Illinois Comptroller Susana A. Mendoza, who convened her fellow financial officers from the most-affected states to seek the extension.
“Colorado has over $1 billion in outstanding advancements,” said Colorado Controller Robert Jaros. “Accrued interest is almost $4 million as of today and will grow to over $20 million if not paid within a year. The State supports reinstating the interest waiver for advancement loans for UI benefits. Colorado needs more time to address the repayment of the outstanding advancements.”
Illinois owes $4.5 billion in outstanding advancements. The advances are generating federal interest at a rate of 2.27%, amounting to more than $187.5 million as of Dec. 6, 2021. Illinois has accrued $19.6 million in interest since the waiver expired and after paying $6.3 million in September.