Ohio businesses should profit as the state completes paying off nearly a $1.5 billion loan it needed to cover unemployment benefits during the COVID-19 pandemic, Gov. Mike DeWine said.
DeWine announced Ohio began the process of repaying the U.S. Treasury Department using federal money from the American Rescue Plan. The action is expected to be completed Thursday. If the loan is not paid by Monday, the federal government would have charged the state 2.777% interest, which would mean higher unemployment taxes for employers.
“I am not willing to let our employers bear the unemployment debt burden caused by the pandemic,” DeWine said Wednesday. “By repaying this loan in full, we ensure that Ohio businesses won’t see increases in their federal unemployment payroll taxes.”
DeWine recommended to the General Assembly in the spring the state use ARPA money to repay the loan. House Bill 168, which authorized the repayment, was signed into law in late June.
The quick repayment is in contrast to actions taken during the 2008 recession, when the state also borrowed money to cover unemployment benefits but also had to pay more than $258 million in interest, according to Ohio Department of Jobs and Family Services Director Matt Damschroder.
“By repaying this loan and avoiding interest, we are strengthening Ohio’s economy which is good for employers and employees alike,” Damschroder said.
The move was applauded by business groups, which said state businesses and potential businesses gain an advantage over other states that could be forced to raise unemployment taxes.
“There is an economic development benefit to using federal dollars to pay back unemployment borrowing,” said Roger Geiger, Ohio executive director of the National Federation of Independent Business. “By doing this, it shows Ohio cares about the small business community by preventing them from paying an unfair penalty on their unemployment insurance premiums that they had no control over. This will give Ohio an advantage over states that chose not to do so.”
This article was originally posted on Ohio’s unemployment loan repayment helpful for businesses