On September 1, Ohio Governor Mike DeWine announced that the state has initiated the repayment of nearly $1.5 billion borrowed from the federal government to pay unemployment benefits to eligible Ohioans during the pandemic. The repayment will prevent future tax increases for Ohio employers that would have been needed to pay off the loan.
Ohio will repay the U.S. Treasury with funds from the American Rescue Plan Act (ARP). Had the $1.47 million loan not been fully paid by September 6, the federal government would have charged 2.2777 percent interest on the debt, which would have led to increases in unemployment taxes for Ohio employers.
“I’m not willing to let our employers bear the unemployment debt burden caused by the pandemic. By repaying this loan in full, we ensure that Ohio businesses won’t see increases in their federal unemployment payroll taxes,” said Governor DeWine. “Without this added tax burden, our employers can invest more money into their businesses and hire more staff. I’m grateful that we were able to work with the legislature to use this federal recovery money to avoid further hardship for Ohio’s businesses.”
In April, the governor recommended to the General Assembly that ARP funds be used to repay the loan. The General Assembly included the repayment provision in House Bill 168, and Governor DeWine signed the bill into law on June 28.
“Paying off this loan will reduce the cost of hiring for Ohio employers, especially small businesses that can’t easily assume the additional cost,” said Lieutenant Governor Jon Husted. “When we make it less expensive to put people back to work, it creates more jobs now and for years to come.”
“I would like to thank Governor DeWine for his leadership on this important issue,” said Steve Stivers, Ohio Chamber of Commerce president and CEO. “Punctually paying off the unemployment loan prevents a 50 percent increase on Ohio employers’ federal unemployment payroll taxes in 2022–totaling an estimated savings of over $650 million for employers over the next three years. It goes without saying but this would have been a debilitating increase for many Ohio businesses.”
The strategy to repay Ohio’s loan and prevent tax increases is in stark contrast to the approach used to repay Ohio’s unemployment loan from the economic downturn in the late 2000s.
“During the previous recession, Ohio borrowed funds through another federal loan to cover unemployment payments, and was forced to pay more than $258 million in interest over time,” said Matt Damschroder, Ohio Department of Jobs and Family Services director. “By repaying this loan and avoiding interest, we are strengthening Ohio’s economy which is good for employers and employees alike.”
Roger Geiger, Ohio executive director of the National Federation of Independent Business, agreed. “There is an economic development benefit to using federal dollars to pay back unemployment borrowing. By doing this it shows Ohio cares about the small business community by preventing them from paying an unfair penalty on their unemployment insurance premiums that they had no control over.”
Repayment of the loan began on August 30 with the final transfer completed September 2.
