Crucial fix to repay borrowed unemployment insurance funds takes first step late in the session
03/14/2012 07:56 AM
Kentucky’s unemployment insurance trust fund, like more than two dozen other states, ran dry during the economic recession. The Commonwealth borrowed nearly $1 billion from the federal government to cover benefits for , and now Kentucky leaders and businesses must come up with a scheme to pay Washington back.
In September, Gov. Steve Beshear used some creative accounting to cover the first interest payment on the loan. Now the legislature must pass a measure involving the employers who pay into the trust fun to figure out how to pay the rest of the money back.
If Kentucky fails to make the interest payments on time, businesses will pay the price.
The proposal , in part, calls for using approximately $79 million line of credit to cover a gap in the interest repayments.
Representative Larry Clark, the bill’s sponsor, said, “I consider this really not a loan, I consider this refinancing our debt to make sure we don’t put a burden on our employers of $600 million dollars.”
The legislation passed out of House Appropriations and Revenue Committee Tuesday unanimously and will now head to the House Floor.
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