OSCPA staff report
In a move supported by OSCPA, Ohio lawmakers this week acted to codify Gov. Mike DeWine's plan to wipe out Ohio's unemployment loan from the federal government.
The Senate Finance Committee on Tuesday reported out House Bill House Bill 168, which would use $1.5 billion in federal American Rescue Plan Act money to pay off Ohio’s pandemic-related unemployment compensation debt. Gov. Mike DeWine in April recommended to lawmakers that Ohio use a chunk of the $5-plus billion the state expects to receive from ARPA to pay back the loans and stave off additional charges to businesses.
The committee amended H.B. 168, originally a federal COVID relief measure for small businesses, fairs, childcare providers and veterans’ homes, to strip its original language and insert the payoff plan. The federal funding previously in H.B. 168 was already enacted via S.B. 109.
Sen. Jay Hottinger, R-Newark, moved the amendment, saying it would require the Ohio Department of Job and Family Services to certify the loan amounts in late August and late December. He said the initial payment is estimated to be up to $1.6 billion, while an additional $100 million could be required near the end of the year.
Rep. Mark Fraizer, R-Newark, joint sponsor of H.B. 168 and co-chair of the Unemployment Compensation Modernization and Improvement Council, said without paying off the debt, Ohio will start accruing interest in September, which will have to be passed on to businesses, raising their costs.
“I think this is something we can all agree is a very expeditious use of our funds in order to keep our businesses in the best competitive market they can be,” Fraizer said. He said as of Monday, Ohio’s debt to the federal government stood at $1.47 billion.
The Ohio Society of CPAs’ President & CEO Scott Wiley, CAE, in April said the plan is an important step for businesses’ recovery April said the plan is an important step for businesses’ recovery. States are given a two-year grace period to repay unemployment compensation loans, then businesses are saddled with penalties on their SUTA that increase by $21 per employee per year until the principal is paid off. The penalties went as high as $105 per employee during the 2008-09 recession until Ohio’s UC loan was eventually paid off by the state after the fifth year in late 2016 with money that employers repaid in early 2017 to Ohio’s Department of Commerce Division of Unclaimed Funds.
Hannah News Service contributed to this report.