Ohio still owes $1.4B in unemployment debt
Posted December 07, 2014 in Selected Press
Lawmakers, Clark County businesses looking for a long-term solution.
Ohio still owes almost $1.4 billion in debt to the federal government for its unemployment fund, costing Ohio businesses millions because they have to pay higher federal taxes to repay the debt.
However, state lawmakers and Clark County business owners said they are optimistic there is more interest and political will to find solutions to an issue that has hampered the state for years.
The federal unemployment tax on employers is scheduled to increase again early next year, costing employers an additional $84 per worker, according to information from the Ohio Department of Job and Family Services.
“It’s a system that has enormous impact on people all over the state,” said Zach Schiller, research director at Policy Matters Ohio, a left-leaning think tank.
The problem became clear at the height of the Great Recession, when unemployment spiked and the fund ran out of cash. About 30 states, including Ohio, borrowed from the federal government in order to cover the increased demand and pay benefits. The state has steadily paid down the debt since then, but still owes about $1.4 billion.
A special Ohio House Committee examining the issue has hosted meetings in cities across Ohio, including Springfield earlier this year. The committee’s chairwoman said she expects to file a report later this month laying out possible long-term solutions to make the fund solvent.
The fund, used to pay benefits to out-of work Ohioans, has been structurally unsound for years. Schiller released a report on the issue late last month.
The fund receives revenue from Ohio employers, who pay a tax on the first $9,000 in each employee’s wages each year, according to information from Policy Matters Ohio. The rates also vary based on other factors, including the amount an employer has paid in taxes and how much in benefits its laid off workers have received, according to Policy Matters.
Dan Young, who owns Young’s Jersey Dairy in Clark County, recently attended a meeting about the issue as part of a small business council.
“In the long run you either need to figure out a way to put a little more money into it or look at the benefits and see if there’s anything that can be done to help control expenses, or a combination of both,” Young said.
It’s a complicated problem, Young said, but is important because of the number of residents and business owners it affects.
Even if the state paid off all of the debt at once, it still wouldn’t solve the long-term problem, said state Rep. Barbara Sears, R-Sylvania, who serves as chairwoman of the Unemployment Compensation Debt Study Committee.
The committee will release a report before the end of this year, Sears said, laying out possible solutions to make the fund solvent long-term.
State Rep. Ross McGregor, R-Springfield, also serves on the debt study committee. He didn’t return calls seeking comment.
A separate committee made up of labor and business leaders issued a report to state lawmakers several years ago that would have addressed many of the current problems, Sears said. But legislators at the time took no action, and the committee stopped meeting and new members weren’t appointed.
However, several factors are drawing more attention to the fund now.
“We are now one of a smaller number of states that is still in debt with the federal government and here we are as a state that has a nice rainy day fund set up,” Sears said. “We’re reducing all these other taxes and yet we’re still in a penalty position with our unemployment. That sort of begs the question of why and what are we doing about it.”
The report the House committee issues will include several ways to address how revenue is generated for the unemployment fund, Sears said. Cutting unemployment benefits is also an option, although she said doing so won’t be enough to make the fund solvent.
Legislation to address the issue is likely next year as well, Sears said. Other items, including changes to how the fund is administered, could also be addressed, she said.
Her term expires in two years, and she wants to see the issue resolved before then.
“We are going to take a serious look at this,” Sears said. “I think we’ve got the collective will to do this right.”
The Springfield News-Sun will continue to provide the best coverage of issues like Ohio’s unemployment compensation fund and how it affects residents and local business owners.
By the numbers
$1.4 billion: Amount Ohio owes in debt to the federal government for its unemployment fund
$84: Increase per worker in the federal unemployment tax on employers going into effect early next year
30: Approximate number of states, including Ohio, that borrowed from the federal government to cover unemployment benefits during the Great Recession
Original Article: http://www.springfieldnewssun.com/news/state--regi...