Rep. Jim Butler (R-Dayton) on Tuesday announced his plan to eliminate Ohio’s $775 million unemployment compensation debt currently owed to the federal government by borrowing money from the Rainy Day Fund (RDF).
He said his HB467 would loan money from RDF to the unemployment compensation fund for the purpose of fully repaying Ohio’s debt "before businesses are assessed additional penalties."
"Just as it makes no sense to have a huge savings account while simultaneously paying a lot of interest on a credit card balance you could easily pay off, it makes no sense for us to fail to eliminate the federal penalty payments seriously beginning to cripple our businesses when we have the means to do so, especially when it does not cost the taxpayers," Butler said in a news release.
"Ohio remains one of three states that have not repaid this debt to the federal government. We should act quickly and get this done in the near future before businesses of all sizes are unnecessarily punished again," Butler said.
Butler's office cited a Legislative Service Commission (LSC) estimate saying that if Ohio pays off its unemployment debt by November 2016, employers would save approximately $500 million per year in federal penalties. Paying off the debt would also save the state tens of millions of dollars in interest payments every year, according to the lawmaker's office.
"HB467 will also create opportunities for insurance companies to offer businesses and workers private unemployment insurance to boost or extend the base level of benefits currently offered by the government. This language in the bill is entirely permissive, but the creation and use of such insurance products could provide workers greater security in the event of a lay off," his office said.
The legislation does not affect current unemployment benefits, but it does require LSC to conduct an independent actuarial analysis regarding the solvency of the unemployment system with a report due by Nov. 15, 2016. An actuarial study of the system has not been done in seven years, Butler's office said.
"I firmly believe the approach proposed in this legislation will immediately benefit Ohio’s business climate, and it will set us up for future successes," Butler said. "Other states have used this approach successfully, and I am confident it will work just as well in Ohio."
The House Insurance Committee is currently considering unemployment compensation reform bill HB394 (Sears).