Ohio Pays Off Federal Unemployment Loan, Saving Employers from Unemployment Tax Increase

Repayment of the loan?to?the United States Treasury is being paid?in its entirety?with funds from the American Rescue Plan Act?(ARPA).?Had the?$1,471,765,771.37?loan not been fully paid by?Sept. 6, the federal government would have charged 2.2777% interest on the debt, which would have?led to increases in unemployment taxes for?Ohio employers.?

?I'm not willing?to let?our employers bear?the unemployment debt burden caused by the pandemic. By?repaying this loan in full, we?ensure that Ohio businesses?won't see?increases in their federal unemployment payroll taxes,? said Governor DeWine.??Without this added tax burden, our employers can invest?more?money into their businesses and?hire more staff.?I?m?grateful?that?we were able to work with the legislature to use this?federal recovery money to avoid further hardship for Ohio?s businesses.??

Governor DeWine?recommended to the Ohio General Assembly in April?that?ARPA funds be used to?repay the loan before the accrual of interest to prevent the increase in unemployment taxes.?The General Assembly included the repayment provision in?House Bill?168, sponsored by?Rep. Mark?Fraizer?(R-Newark) and Rep. Mike?Loychik?(R-Bazetta),?and Governor DeWine signed the bill into law on June 28, 2021.?

?Paying off this loan will reduce the cost of hiring for Ohio employers, especially small businesses that can?t easily assume the additional cost,? said Lt. Governor Jon Husted. ?When we make it less expensive to put people back to work, it creates more jobs now and for years to come.?

?I would like to thank Governor DeWine for his leadership on this important issue,? said Ohio Chamber of Commerce President and CEO Steve Stivers. ?Punctually paying off the unemployment loan prevents a 50 percent increase on Ohio employers' federal unemployment payroll taxes in 2022 ? totaling an estimated savings of over $650 million for employers over the next three years.? It goes without saying but this would have been a debilitating increase for many Ohio businesses.?

This fiscally conservative strategy to repay Ohio?s loan and prevent tax increases is in stark contrast to the approach used?to repay Ohio?s unemployment loan resulting from the economic downturn?in the late 2000s.?

?During the?previous recession, Ohio borrowed funds through another federal loan to cover unemployment payments, and was forced to pay more than $258 million in interest over time,? said Ohio Department of Jobs and Family Services Director Matt Damschroder. ?By repaying this loan and avoiding interest, we are strengthening Ohio?s economy which is good for employers and employees alike.???

?There is an economic development benefit to using federal dollars to pay back unemployment borrowing. By doing this it shows Ohio cares about the small business community by preventing them from paying an unfair penalty on their unemployment insurance premiums that they had no control over. This will give Ohio an advantage over states that chose not to do so. We want to thank Ohio Governor Mike DeWine, Lt. Governor Husted, and the legislative leadership for providing this meaningful relief,? said Roger Geiger,?Ohio executive director of the?National Federation of Independent Business.

Repayment of the loan?began on Monday?and?requires?several cooperative steps between?the Ohio Department of Job and Family Services and?Ohio Office of Budget and Management (OBM). These include certifying the debt by OBM and transferring the funds by OBM to the Ohio Unemployment Insurance Trust Fund. The final transfer from the Ohio Treasurer to the United States Treasury?expected to be complete by tomorrow.?