Frankfort Local News

Beshear Signs Deal on Unemployment Loan Interest Payments Into Law

Governor Steve Beshear has signed a plan to save employers from federal unemployment insurance tax hikes into law.

At his first ceremonial bill signing of the year, Beshear praised lawmakers and the business and labor communities for reaching a compromise.

House Bill 495 would allow Kentucky to borrow money from a state organization to repay interest on a more than nine hundred million dollar unemployment loan.

And while the bill will still raise taxes for employers in two years, it’s at a lesser rate. Beshear says that’s a fair answer to the problem.

“There were no easy answers to this. There isn’t any silver bullet out there that we could latch onto that made things OK without everybody stepping up and being a part of this solution,” he says.

Frankfort Local News

Unemployment Insurance Deal Passes Senate

The Kentucky Senate has passed an amended bill that would help the state repay interest on a federal unemployment insurance loan.

And despite concerns that the Senate amendments would derail the proposal, the bill’s original House sponsor has agreed to the changes.

The amendment by Senator David Givens would defer an increase in the taxes employers pay on wages once the unemployment insurance fund is healthy again. Givens tacked that change onto a bill that would allow the state to borrow money virtually in-house in order to repay interest payments on a more than 900 million dollar federal loan.

But the senator says he got all parties involved to sign onto his changes.

Frankfort Local News

Senate Proposes Changes to Unemployment Loan Interest Payment, Putting Plan in Danger

A Kentucky Senate committee’s changes to a bill to repay a federal loan could derail the plan.

The state borrowed nearly a billion dollars during the recession to shore up the unemployment insurance fund. In 2010, lawmakers approved a plan to repay the loan through higher taxes on employers. This year, the House approved a plan to interest payments on the loan through higher taxes as well.

The Senate Judiciary Committee is now considering amending the interest payment plan to change the 2010 plan. They say employers need relief from the original tax increase if they’re also facing higher taxes to make interest payments.

Judiciary committee chairman Tom Jensen is asking supporters of the amendment to try to hammer out a compromise today.

“Would it help if we gave everybody some time to discuss this?” he asked in a committee meeting. “Cause I saw you back there discussing this with [bill sponsor] Representative [Larry] Clark on some issues. Would it help if you all had some time if this is something you could readily resolve yourselves?”

Education and Workforce Development Secretary Joe Meyer says such a discussion would help.The committee plans to meet again later today to vote on the amendments or another compromise.

But Representative Clark, who sponsored the bill, says any changes to his bill could kill it because the revisions would need the federal approval his bill already has.

“I would caution the committee members, any changes we make would have to be submitted to the federal government to make sure we’re in compliance with the federal unemployment act and as you well know we adjourn April 12 so any changes would put this legislation in peril,” Clark says.

The committee plans to vote on the bill later today.

Frankfort Local News

House Passes Bill to Address Unemployment Loan Interest Payments

A bill designed to help pay federal interest payments is one step closer to becoming law.

The measure passed the House unanimously today, although a few Republicans expressed concerns over the bill.

The bill would let the state borrow money to help make federal interest payments on a loan Kentucky took out during the recession. The state borrowed more than $900 billion to help pay for unemployment insurance, but didn’t account for interest payments.

If the state is late on payments, the federal government can put a higher tax on employers to recoup the funds. Representative Larry Clark, the bill’s sponsor, says the proposal would shield those businesses.

“Well I’ll tell you what this is. If you do not vote on this legislation, we will have a $600 million increase for unemployment insurance on each employer large and small,” Clark says.

Frankfort Local News

Plan to Repay Interest On Unemployment Loan Passes House Committee

A compromise to help employers avoid high federal unemployment insurance taxes has easily cleared a House committee.

The proposal would allow Kentucky to borrow money from a bank or other organization to repay federal loans. Kentucky borrowed nearly one billion dollars from the federal government to pay for unemployment insurance during the recession.

Up until now, the state had no plan on how to keep up with interest payments on that loan. If the state is late on payments, the federal government can put a higher tax on employers to recoup the funds.

Gay Dwyer of the Kentucky Retail Federation says the compromise bill is needed to keep enormous taxes off employers.

“If it’s not made, we lose our complete federal tax credit which means our federal unemployment taxes will go from what has been $42 an employee to $420 an employee. That’s simply not acceptable,” she says.

Frankfort Local News

Proposal to Repay Federal Loan Interest Could Save Kentucky Employers From Extra Fees

A deal to help Kentucky repay a federal loan is officially on the table.

During the recession, the commonwealth borrowed more than $900 million from the federal government to shore up the unemployment insurance fund. In 2010, the General Assembly approved a plan to repay the debt over time. But when that measure passed, lawmakers and the governor believed the federal government would defer interest payments. That didn’t happen, and the state was left on the hook for millions of dollars in interest. If Kentucky doesn’t make the interest payments, employers will face government fees and the loss of federal tax credits on unemployment insurance.

House Bill 495 was proposed this week to address the problem. It allows the state to take a loan from an outside source to pay down the interest. It appears that Kentucky Employers Mutual Insurance—which helps fund workers’ compensation to employers—will provide that loan.

“There’s some talk that they would, that they would in effect use some of that reserve money and pay this back and then that money would be paid back through the assessment mechanism. So KEMI would become, yeah the bank so to speak,” says House Speaker Greg Stumbo.

Local News Politics

New Indiana Unemployment Law Takes Effect Saturday

Indiana workers taking voluntary buyouts will no longer eligible for state unemployment benefits starting tomorrow, and severance pay will be counted against unemployment payouts.

Those are among the provision of the state’s new unemployment law. The changes are part of Indiana’s plan to pay off a $2 billion loan from the federal government.

Lawmakers approved major changes to how unemployment benefits are paid out and how much businesses pay in to the system earlier this year. All the changes become effective October 1.

Republican Representative Dan Leonard, who authored the law, says the new limits on who is eligible for benefits, coupled with new premiums businesses pay, should put the state’s unemployment insurance trust fund back in the black.

The state was forced to take the federal loan in 2008 to cover increasing unemployment claims. Leonard expects the loan to be paid back by 2018.

Opponents say they’re concerned the changes will hinder out of work Hoosiers who need the benefits to tide them over while they look for new employment.

(Information for this story also came from the Associated Press)