INDIANAPOLIS (WISH) — When the recession hit in 2008, Indiana was forced to borrow money from the federal government to pay unemployment benefits.
The state budget surplus is now being used to pay off the loan.
It’s a loan that, at one point, was over $2 billion. The current payoff is $250 million.
If the state doesn’t pay it off, business owners face penalties that would amount to $126 per year per employee.
At Sensory Technologies, the bill would be $10,000 and managing principal Anne Sellers has a better way to spend the money.
“$10,000 is going to help give some raises,” she said.
Sellers joined the governor for an announcement that sounds like a no-brainer because the money will be returned to the surplus in less than a year.
“These funds will be reimbursed by the end of fiscal year 2016 through collections of existing state unemployment taxes already being paid,” Pence said.
Yet those unemployment taxes will go down because of the penalties that will be avoided.
The penalties would total $327 million next year.
“A third of a billion dollars going back into the economy on a short term loan, it’s a smart business decision,” said Brian Burton of the Indiana Manufacturers Association.
“You know, keep that $327 million in our state economy rather than having it go to the black hole that is the federal government,” said Kevin Brinegar of the Indiana Chamber of Commerce, “And so, you know, that’s a good thing.”
Business owners have been paying smaller penalties since 2011, and Barbara Underwood of the National Federation of Independent says the relief is welcome.
“[I] wish it could happen sooner,” she said. “But really the state wasn’t in a position to do that.”
And for the governor, it’s also a political victory — the sort of move that is likely to be mentioned in campaign ads next year.