CHICAGO — Illinois lawmakers wrapped up a two-week veto session late last week by approving a package that authorizes $2.4 billion in revenue bonding authority to end the state's reliance on federal loans to fund its unemployment insurance program.
The bills bolster an existing $1.4 billion authorization by $1 billion. Finance officials were not available Friday to comment on how soon the state might borrow or how much of it might tap.
Supporters promoted the plan as the most affordable means of restoring the trust fund to solvency by lowering borrowing costs, and they touted the business perks included in the package as a way to promote job creation.
Illinois' Unemployment Trust Fund, used to pay out jobless benefits, is expected to end the year with $2.4 billion in outstanding loans from Washington to cover benefits amid high unemployment.
Until last January, the loans were interest-free due to a stimulus act provision. Now many states, like Illinois, face high interest payments of 4.1% starting this year. Without action, supporters warned that businesses across the state faced a greater burden in funding the trust.
The bill increasing the current authorization to repay the government and fund the trust is expected to save $240 million in interest. It leaves existing benefits intact and staves off increased business taxes. The bonds would be repaid with standard business payments into the trust fund.
The funding changes are expected to save businesses at least $400 million through 2019 by eliminating penalty taxes that further federal borrowing would trigger. It also would provide a 16% unemployment-insurance tax reduction for the 46% of companies in the state that have not laid off workers during the recession.
Gov. Pat Quinn praised passage of the bill. "We are in difficult economic times, and we need to bolster our unemployment insurance program to protect both workers and businesses," he said in a statement.
Passage of the plan backed by business and labor went smoothly with bipartisan support while other high-profile agenda issues languished during the annual fall session. Lawmakers adopted some minor pension changes aimed at curtailing abuses, but pushed off action on a larger package of reforms designed to reduce Illinois' massive unfunded liabilities. A scaled-down gambling expansion bill also failed in a House vote, while lawmakers also did not take action on tax relief sought by Chicago's CME Group exchanges.
Gambling expansion proponents revamped a bill that passed in the spring amid a threatened Quinn veto. The governor supports five new casinos, including one in Chicago, but is opposed to gaming at the state fair, racetracks and airports included in the original bill. The House voted down the revised bill.
Senate President John Cullerton, D-Chicago, is hopeful a deal can still be worked out. "I don't believe there is that much difference between the governor and the bill that failed last night," he said.
Lawmakers faced increased pressure to act on pension reforms after unions blocked passage of benefit cuts earlier this year, but they again put off a vote. The reforms would protect the accrued benefits already earned by current employees, but going forward, Illinois would offer a three-tiered system with employees paying more to maintain their current benefits.
Illinois holds the distinction among states of having a retirement plan with the lowest-funded ratio, 45.4%, with $75.7 billion of unfunded liabilities, and it's cited as one of the state's most daunting challenges by rating agency analysts.
The Civic Committee of the Commercial Club of Chicago, which launched an advertising campaign to push lawmakers to act, voiced disappointment. "Reform of our state's pension system cannot wait. The unfunded liability will only continue to grow by billions of dollars each year, making the solution more and more difficult to implement," the statement read.
Lawmakers and Quinn failed to reach a pact on tax relief sought by CME and other businesses that have warned they might leave the state without. Legislative leaders scheduled a session later this month to act on some of the stalled bills.
The unemployment bond authorization is in Senate Bill 72.