Thursday, March 31, 2011

Quinn signs temporary unemployment fix

By Jamey Dunn

Gov. Pat Quinn signed into law today a measure that will ensure unemployment benefits continue to flow to thousands of Illinois residents.

The measure will continue the state’s extended benefits program that allow those facing long-term unemployment to collect checks after they have exhausted the standard unemployment benefits. Because of the state’s slowly but steadily improving unemployment rate, Illinois was in danger of falling outside of the statutory requirements for federal support of the program. The new law allows the state to change the way it calculates who is eligible for the program. The bill passed in the Senate Wednesday and the House today.

The legislation also addresses interest that Illinois must pay on a $2.9 billion federal loan it took out to fund unemployment benefits by allowing the Illinois Department of Unemployment Insurance to temporarily divert some of the unemployment tax employers pay into a special fund dedicated for the payment. The state has to pay up on $83 million in interest by September, or risk losing out on $1 billion in federal tax credits for employers and $100 million in federal funds for the Illinois Department of Employment Security.

Timothy Drea, secretary treasurer of the Illinois AFL-CIO, told a Senate committee this week that the change to the law will allow 41,000 unemployed workers to continue to collect benefits.

“This is a temporary solution to the major problems within the unemployment insurance trust fund,” David Vite, president of the Illinois Retail Merchants Association. “It’s a temporary solution because there were a few things that needed to be done immediately.”

Vite said the law had to be changed to allow unemployed workers to continue to receive federal benefits as well as to ensure that the state can make its interest payment. “If the $90 million interest penalty that the state of Illinois…[owes] is going to be paid, changes had to be made to the unemployment insurance act right now so those revenues from the first quarter payments would be available September 30.”

He added, “Those things had to be done in the next week or so.”

Vite and Drea said that labor and businesses groups plan to come back to the table to sort out a long-term solution that they say would be considered by lawmakers during the fall veto legislative session.

For and in-depth look at the state’s troubled unemployment insurance fund, see Illinois Issues November 2010 page 24.

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