Several years ago, Ohio’s unemployment rate increased and the state’s unemployment fund was ill-prepared to cover the costs. The federal government subsequently provided Ohio with a loan to continue paying jobless benefits.
With the exception of interest, employers were, and still are, solely responsible for paying the balance of the debt incurred. If no action is taken, employers’ unemployment tax bills will continue to incrementally rise through 2017 until the debt is paid.
The Greater Cleveland Partnership/COSE has been working methodically with its members, policymakers, and partners towards a solution to this important issue. And, an encouraging proposal is expected to be introduced and passed in the state legislature this week that would pay Ohio’s debt to the federal government.
State funds, which would be repaid, would be used to pay the debt, triggering the federal unemployment tax rate to go back to the regular level. Here’s how it could impact your company:
This year, employers are paying a total of $147 per employee in unemployment taxes due to the debt Ohio owes the federal government. By comparison, the regular unemployment tax rate would be $42 per employee, if Ohio did not owe money to the federal government. Employers are expected to pay $168 per employee in 2017—if no action is taken—due to the debt.
If the debt were to be paid by November 10, 2016—as the legislature and Governor intend to allow for through legislation that could pass as early as Wednesday—it’s estimated that Ohio employers would save almost half a billion dollars next year.
GCP/COSE supports efforts to pay Ohio’s debt and applauds the Administration and leadership in the General Assembly for their commitment to resolving this issue. The sooner the debt is paid, the sooner relief can be afforded to Ohio’s employers, saving them an estimated $405M that can be reinvested in the state’s economy.
In addition, GCP/COSE will continue to advocate vigorously for long-term reforms to ensure the unemployment fund achieves solvency in the years ahead.
Contact your state legislator today
and urge them to act on this important issue.