Ohio has initiated the repayment of nearly $1.5 billion borrowed from the federal government to pay unemployment benefits to eligible Ohioans during the pandemic. This repayment will prevent future tax increases for Ohio employers that would have been needed to pay off the loan.
Repayment of the loan to the United States Treasury is being paid in its entirety with funds from the American Rescue Plan Act (ARPA). Had the $1.5 billion loan not been fully paid by Monday, Sept. 6, the federal government would have charged 2.28% interest on the debt, which would have led to increases in unemployment taxes for Ohio employers.
Without this added tax burden, employers can invest more money into their businesses and hire more staff, said state officials.
Ohio Chamber of Commerce President and CEO Steve Stivers said that “punctually paying off the unemployment loan prevents a 50%increase on Ohio employers’ federal unemployment payroll taxes in 2022 – totaling an estimated savings of over $650 million for employers over the next three years.”
During the previous recession, Ohio borrowed funds through another federal loan to cover unemployment payments, and was forced to pay more than $258 million in interest over time, said Ohio Department of Jobs and Family Services Director Matt Damschroder.