Gov. Beshear 'gambling" on how to pay off unemployment insurance loan, senator says
08/26/2011 05:54 PM
Like a lot of states, Kentucky borrowed heavily — nearly $1 billion — from the federal government to cover unemployment insurance payments after the 2008 recession. The Unemployment Insurance Trust Fund that pays out-of-work Kentuckians had run dry.
Now, the first $28 million interest on that billion dollar loan comes due date Sept. 30. The method of payment from Kentucky to the federal government? To be determined.
“We have been fortunate in that the federal government has waived the 2010 interest. We had expected that,” said Greensburg Republican State Senator David Givens. “The task force was also expecting the federal government to not waive the 2011 interest. So I and many of my colleagues are surprised that this issue was not addressed in the regular or special session that we had this year.” (see the 3:40 mark of the clip)
The Unemployment Insurance task force is the one that Gov. Steve Beshear put together to get the UI trust fund solvent. Givens was part of the panel that helped write and eventually passed legislation in a special session last year that cut benefits to unemployed workers and raised taxes on employers to put the trust fund on a path toward solvency.
Part of the path to solvency requires the trust fund to pay back the money borrowed from the government. The first interest-only payment is the one due in September.
Givens told Pure Politics that Kentucky businesses face a stiff penalty if the state fails to make the interest payment. Businesses would have to pay an additional $360 per worker per year, totaling hundreds of millions statewide.
Beshear guaranteed in an interview that the payment would be made one way or the other so that the businesses wouldn’t lose their federal tax credit and have to pay extra. But he added that calling a legislative special session to approve the interest payment would be the last resort. (see the 4:40 mark of the clip)
Givens, however, said the governor will have to shift to a Plan B if his best hope is that the federal government delays or waives the interest payment.
“He’s gambling on a federal waiver that I don’t think is going to happen.” (see the 6:30 mark of the clip)
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