Illinois and 7 other states ask feds to freeze pastime on loans used to pay unemployment advantages all the way through pandemic

Illinois and 7 other states are asking the federal government to reinstate a freeze on interest that's piling up on money they borrowed to pay unemployment benefits during the early phase of the coronavirus pandemic.

Illinois owes practically $4.5 billion to the federal unemployment trust fund, which has been amassing activity at a expense of 2.27% considering the fact that Sept. 6. As of Friday, the state owed $19.6 million in hobby, a tab that might grow to more than $one hundred million if the debt is left unpaid for a 12 months, based on Comptroller Susana Mendoza's office.

"Taxpayers may still now not be on the hook for interest simply because the pandemic is lasting longer than projected," Mendoza spoke of in a press release. "States are wrestling with how most fulfilling to replenish their COVID-depleted unemployment money and they should not have to do that with the meter working."

State Comptroller Susana Mendoza talks with colleagues before the governor's finances address to a joint session of the Illinois condo and Senate, at the Illinois State Capitol in Springfield, Wednesday, Feb. 19, 2020. (Antonio Perez / Chicago Tribune / Chicago Tribune)

Mendoza joined the executive fiscal officers of Colorado, Connecticut, Massachusetts, Minnesota, New Jersey, ny and Pennsylvania to ask U.S. Treasury Secretary Janet Yellen for the Biden administration's aid for reinstating a pause on interest prices that expired in September.

"We agree with the waiver cut-off date become firstly decided beneath the idea that the pandemic would doubtless be over and that the economic system and state governments could be in recuperation mode," they wrote in a letter Tuesday to Yellen. "despite the fact, it is rather plain to see that this public fitness disaster is not over, and the improvement supplied by using this activity waiver is still indispensable."

The financial chiefs are asking that the pastime prices be frozen "except at least June 30, 2022, giving ample time for our states to address this fiscal predicament correctly," a flow that might require congressional approval.

Altogether, 11 states -- three of which did not signal the letter --and the U.S. Virgin Islands owed $197.three million in pastime as of Friday, based on the U.S. Treasury department. Illinois' awesome debt is the third-greatest among the states, trailing the $19.four billion owed by way of California and $9.2 billion owed through new york.

The Treasury department did not respond automatically Tuesday to a request for comment on the letter.

Mendoza has been discussing the situation with members of the Illinois congressional delegation and has gotten a "superb response," spokesman Abdon Pallasch talked about.

Republican lawmakers have been critical of Democratic Gov. J.B. Pritzker and participants of the legislature's majority party for now not addressing the deficit within the unemployment insurance have faith fund in this year's $forty two billion state working price range.

"We've everyday for a lot of months that the unemployment coverage have faith fund debt changed into a problem we'd should clear up," referred to state Rep. Tom Demmer of Dixon, a lead funds negotiator for the residence Republicans.

Pritzker and the legislature's Democratic majority left out calls from the GOP to make use of one of the crucial federal relief cash in this 12 months's $forty two billion working finances to fill up the unemployment have faith fund, Demmer spoke of.

"The reality is that 41 different states have addressed their personal problems, and our method in Illinois should not be to easily hope the federal govt bails us out once more," he said.

Mendoza stated that without the federal motion she and different fiscal officers are asking for, repaying the hobby could outcome in larger unemployment taxes for companies and reduce benefits for americans who are out of work.

"The can charge of protecting this federal initiative to extend unemployment advantages all the way through the pandemic should still not fall completely on the shoulders of groups and labor," Mendoza spoke of in an announcement.

dpetrella@chicagotribune.com