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State Senator Bill Beagle
Helping Ohio's
Job Creators Pay Off Unemployment Compensation Debt
Some bills we pass in the Ohio Senate generate front-page headlines and
constituent emails by the hundreds, while others travel through the
legislative process with little fanfare. Sometimes it’s legislation
that flies under the radar that makes the greatest impact on the lives
of ordinary Ohioans.
Legislation we recently passed to erase Ohio’s unemployment
compensation debt is a perfect example.
This spring, the Ohio Senate passed a bill to level the mountain of
debt that Ohio’s employers had to climb in order to fund unemployment
benefits for Ohioans out of work. Ohio had borrowed heavily from the
federal government during the Great Recession, and it was time to pay
the piper.
In early 2009, Ohio’s unemployment compensation fund went completely
broke after months of staggeringly high unemployment. During that
economic downturn the state’s unemployment rate had spiked to a 26-year
high, and we had squeezed every last penny out of our unemployment
compensation fund. In response, the businesses in the state borrowed
more than $2 billion from a federal trust fund in order to continue
paying jobless benefits struggling families needed to get by. At the
beginning of this year, the state’s businesses still owed $300 million
on that debt.
A debt of $300 million may not sound like much to citizens accustomed
to a federal government that owes trillions, but Ohio’s job creators
feel the direct impact through the unemployment taxes they pay.
Ohio businesses under normal conditions pay $42 per employee per year
in unemployment taxes. Because of the outstanding debt, the federal
government was set to increase those penalties from $147 per employee
per year to $168 per employee for 2017. After accounting for
Ohio’s roughly 5 million employees, we were looking at a total of a
half a billion dollars in unnecessary federal taxes on Ohio businesses.
We know that every dollar paid in unemployment taxes is one less dollar
for employers to invest in Ohio’s people and economy. When small
businesses employ half of the workforce, extra taxation can mean the
difference between hiring and firing, expanding or shrinking. As a
state, we’ve come too far to let that happen.
When employers asked the legislature to act to eliminate their debt, we
listened. We worked with local and regional businesses and partnerships
to develop a solution to the mounting problem. We formulated a plan to
temporarily use a portion of Ohio’s unclaimed funds in order to pay
back the original federal loan this fall. The solution allows the state
to repay the remainder of the federal debt, which then reverts
unemployment taxes on our businesses to normal levels and avoids the
crushing new federal penalties. All tallied, this will save Ohio
businesses an estimated savings of over $400 million, that instead of
being sent to Washington, can now be used to hire, train and invest in
the workforce and our economy here in Ohio.
Widely praised by the business community, the plan to repay Ohio’s
unemployment debt burden is an essential piece of the legislative
effort to lighten the burden on job creators. When job creators have
the resources to expand their operations and bring more employees on
board, our economy grows. Our state thrives. We still have work to do,
but we’re on the right track.
Senator Beagle operates a small business and serves as the Chairman of
the Senate Finance Subcommittee on Workforce.
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