Because of Indiana’s commitment to fiscal responsibility and strong budget reserves, Hoosier employers will be relieved of a burdensome tax on hiring next year.
During the height of the Great Recession, most states across the nation relied on millions of dollars in federal loans to pay unemployment benefits to citizens who had lost their jobs. Indiana was no exception.
Facing a flood of unemployment claims, the Indiana Department of Workforce Development (DWD) needed $2.2 billion in federal loan support. Normally, our state’s unemployment insurance trust fund can weather most bumps in the economy, but this recession was particularly overwhelming.
Since 2011, Indiana has used unemployment insurance premiums – which are paid by employers to the state – to begin paying down our outstanding federal loan balance. However, the federal government imposes an additional tax penalty on employers in states that have loans outstanding.
Governor Pence and leaders from the General Assembly have decided to use a portion of our state’s general fund to pay off the remaining balance of our Unemployment Insurance loan.
The impact of this decision will be felt across the state. By advancing $250 million to pay off the remaining loan balance, Indiana employers avoid $327 million in federal penalties that would have been assessed in 2016.
The Indiana DWD and the Office of Management and Budget will execute the payment to the federal government and fully reimburse the state’s general fund to its prior level by mid-2016 using revenue from the state’s regular unemployment insurance taxes.
This is a clear example of how Indiana’s fiscal integrity has resulted in a practical benefit for our economy. Indiana is poised to repay this loan ahead of schedule due to our strong reserves and ongoing commitment to responsible budgeting.
In the upcoming legislative session, I will continue advocating for fiscal policies that manage state resources sensibly, reduce burdens on job creators and save taxpayer dollars.
As always, I welcome your thoughts and ideas concerning these and other topics. My office can be reached at 800-382-9467 or by email at Senator.Long@iga.in.gov
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