Do not forget: Stay out of debt.
When it comes to Illinois’ overall financial picture, there’s not a lot of good news.
The state faces debts, debts and more debts, and the only solution is for our public officials to dig taxpayers out of the hole they have put them in.
That’s why Gov. J.B. Pritzker’s recent announcement of his debt-reduction plan involving the state’s unemployment insurance trust fund is welcome news.
Pritzker said earlier this week that the state is reducing the fund’s remaining $1.8 billion in “pandemic-related debt” by $450 million.
“This payment will reduce the remaining balance of our loan by 25 percent and reduce interest costs by an estimated $10 million over the course of a year,” Pritzker said.
Unemployment in Illinois skyrocketed during the coronavirus pandemic thanks to the steps taken to slow the spread of the virus that included an economic lockdown. As a consequence, Illinois was forced to borrow $4.5 billion from the federal government to meet rising demands for unemployment assistance.
But borrowing comes with strings, including the payment of interest and a repayment schedule that has unpleasant consequences for both employees and employers.
State officials earlier this year repaid $2.7 billion of the $4.5 billion debt, using federal pandemic aid money to repay a substantial portion of the unemployment debt. That, by any measure, is a neat trick.
That left the $1.8 billion balance, leading Pritzker and legislative Republicans to quibble over what to do about it.
Pritzker said the $450 million repayment is the product of reduced stress on the state’s unemployment system resulting from “historically low unemployment claims” that have produced “strong and steady growth” in the trust fund.
As a consequence, Pritzker said he hopes to eliminate the remaining debt “by the end of this calendar year.”
The repayment, however, does not come without continued costs in the form of unemployment taxes paid into the trust fund by employers. That’s why Republican legislators, while applauding the repayment, argued again that Illinois should have used its $8.1 billion in federal coronavirus aid to repay the entire $4.5 billion debt.
“Instead, the majority party waited for that money to be depleted on other proposals and programs, including personal pork projects,” state Sens. Win Stoller and Sue Rezin said in a joint statement.
Repaying the entire debt was, in our view, the better move. Debt is poison, and the sooner it’s paid off, the better for everyone. But some progress is better than none at all. The governor is moving in the right direction.