State Could Pay Back Federal Unemployment Loan Early

Jul 27, 2015

The loan is costing businesses more than $100 per employee.
Credit Jim Grey / https://www.flickr.com/photos/mobilene/

Significant tax relief for Hoosier employers could be on the horizon if the state’s revenues do well the next few months.

Indiana took out a more than $2 billion loan from the federal government at the height of the recession to pay unemployment benefits.  It’s been paying it back ever since. 

And as long as the state owes money on the loan, employers have to pay a penalty. 

This year, that penalty is $105 per employee; next year, it rises to $126. 

But Governor Mike Pence says he’s exploring the potential to pay back the loan, in full, early.

“If revenues hold or exceed projections, given the magnitude of the reserves that we have, we think it may be possible this fall,” Pence says.

Paying off the loan would save Hoosier employers $327 million next year. 

Still, Pence says he’ll remain cautious – the ability to pay back the loan will depend on how well state tax collections fare the next few months, as well as just how much money is left to pay back.