On March 28, State Senator Win Stoller (R-Germantown Hills) and Senate Deputy Minority Leader Sue Rezin (R-Morris), who were the Senate Republicans’ chief Unemployment Insurance (UI) Trust Fund negotiators, held a press conference to criticize Illinois Democrats for ramming through legislation that shortchanged the state’s massive $4.5 billion UI Trust Fund deficit, which could lead to one of the largest tax increases on Illinois employers in history.
“This irresponsible and ill-advised plan that Illinois Democrats passed will leave our state with a nearly $2 billion UI Trust Fund hole,” said Sen. Stoller. “To fill this hole, Democrats are either going to force Illinois employers to pay one the highest tax increase on jobs in state history or cut worker benefits. This is both disheartening and infuriating when you consider that the employers who will be hurt the most by the possible tax increase are the ones who were forced by our Governor to shut down and lay off employees during the pandemic.”
The state of Illinois received $8.1 billion from the federal American Rescue Plan Act (ARPA) of 2021, which was designed to be used for COVID-19 relief and help with economic recovery. The federal government approved ARPA funds to be used on items like the UI Trust Fund, which prompted 31 states to use their APRA dollars to help fully fund their own deficits.
Meanwhile, Senate Bill 2803 appropriated only $2.7 billion of the $8.1 billion available APRA funds for the state’s UI Trust Fund. Sens. Stoller and Rezin noted that while on paper the $2.7 billion may appear to be fiscally responsible and a large amount of money, however, it was only a small fraction of the state’s available funds and Illinois is still left with a $1.8 billion deficit, making it one of only nine states to still have an outstanding trust fund debt.
“The Governor and his Democratic allies in the General Assembly had nearly a year to allocate federal ARPA dollars to fix the growing UI Trust Fund deficit crisis,” said Sen. Rezin. “Instead, of being fiscally responsible and prioritizing our trust fund, they waited and decided to appropriate our one-time federal dollars on other proposals and programs, including personal pork projects within their districts. Now, after only paying off 60 percent of the trust fund’s debt, they are patting themselves on the back and calling themselves financially responsible while our state’s employers and employees are preparing to bear the burden for their failure to truly fix this problem.”
Under current federal and state law, if the UI Trust Fund still has a deficit beginning next year, a reduction is imposed on the state’s Federal Unemployment Tax Act (FUTA) credit, which will increase taxes on businesses. Additionally, if Illinois’ UI Trust Fund deficit isn’t resolved, state law requires a tax increase on businesses as well as a benefit reduction on all unemployment recipients.
“Due to Democrats inability to stop themselves from going on a massive spending spree, our state was left with just $3.5 billion of APRA funds last week to try and pay back a $4.5 billion debt created by their policies and failure to effectively combat unemployment fraud,” continued Sen. Stoller. “And now, because of that spending spree, the people of our state may be facing even more financial consequences and fiscal instability.”
Senate Bill 2803 passed out of Senate and House along a partisan roll call and was signed into law by Gov. JB Pritzker on Friday, March 25.