If a comprehensive fix isn’t found, the stop gap measures will take effect for 2018 and 2019: a benefits freeze for workers and a tax hike that employers pay on wages.
Ohio’s unemployment compensation system has been in big trouble for several years as the taxes paid by employers weren’t enough to keep up with benefits paid out. State leaders have failed to agree on a fix for years.
During the Great Recession, the fund went broke Jan. 12, 2009, forcing the state to borrow from the federal government to keep issuing unemployment checks. The state borrowed $3.4 billion and had to pay more than $200 million in interest on the loan, which Ohio paid off this year.
The stop gap plan also removes a penalty for employers should Ohio need to borrow money from the feds again. Current law requires employers to pay the interest on loans — not the taxpayers.
Last year, nearly 200,000 Ohio workers relied on unemployment checks when they faced temporary lay offs. Rosenberger said they’re looking for a fix soon — before another recession hits Ohio and the fund. Ohio is in the eighth year of an economic expansion and another two years would make it the longest expansion in the post World War II era.
“That Great Recession just devastated us. All over the state and in each of our communities, it was just brutal for manufacturing. We lost so many plants and so many companies. Laid off so many people. And we haven’t recovered from that. This system, we rely on it. Businesses and our employees, we rely on this system to get through the tough times. We need it to be solvent,” said Eric Burkland, president of the Ohio Manufacturers’ Association.
He added: “We are just not actuarially sound. Our benefits are, compared to some of the competitor states, are fairly rich and our premiums are fairly low. So that’s a toxic brew…At the end of the day, it’s math.”
NFIB Ohio legislative director Chris Ferruso said Ohio must craft a solvency plan for the fund.
“If we don’t, it’ll be deja vu in Ohio all over again. We will find ourselves in the same boat we were just in through this recession,” he said.
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