Policy group urges Ohio to replenish unemployment fund with federal moneyFebruary 15, 2022
Ohio already has used part of a federal windfall to repay billions of dollars it borrowed to pay unemployment claims, and now a policy group believes the next step is to use a second round of payments to replenish the unemployment trust fund.
Phase II of the American Rescue Plan Act funding is expected to bring the state another $2.6 billion in federal money, and The Buckeye Institute, a Columbus-based policy group, believes part of that should be used to restore the trust fund to its pre-pandemic balance.
The state used part of the first round of ARPA funding in September to pay off nearly a $1.5 billion loan it needed to cover unemployment benefits during the pandemic.
That move, Gov. Mike DeWine said, was an effort to help businesses avoid an increase in unemployment taxes.
The Buckeye Institute believes restoring the trust fund will do much of the same.
“In September 2021, Gov. DeWine followed The Buckeye Institute’s recommendation and wisely repaid Ohio’s federal unemployment loan. That prudent move prevented Ohio taxpayers from paying millions of dollars in interest to the federal government,” Rea Hederman Jr., executive director of the Economic Research Center at The Buckeye Institute and vice president of policy, wrote in a policy memo. “Refilling the state’s unemployment coffers with ARPA dollars would be another sound, strategic decision. Paying unemployment claims as they arise with unemployment fund reserves instead of borrowing new federal loans will protect against future interest payments and tax increases, a move that will pay off for Ohio families and businesses over the long run.”
The U.S. Treasury Department allows using the money to restore the trust fund, but Hederman said to take advantage of a federal grace period and avoid a “maintenance of effort” provision in ARPA’s federal rules, action must be taken by the General Assembly by April 1.
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