Metro East Sun

Illinois' Unemployment Insurance Trust Fund is facing an unprecedented deficit as the state is overwhelmed with unemployment claims coming from the economic impacts of the COVID-19 pandemic.

The state currently owes the federal government $4.2 billion in the form of a Title XII loan to cover the Unemployment Insurance Trust Fund, according to The Pantagraph. That number is expected to rise to over $5 billion this year as the state's unemployment rate remains high, hovering at 7.1% as of last May.

State Rep. Amy Elik (R-Fosterburg) warned that if the deficit is not taken care of, the state could be forced to raise taxes on businesses. 

"It’s an issue the General Assembly must address and take seriously as this debt must be paid back as mandated by the federal government," Elik told Metro East Sun. "If the deficit is not addressed, it could result in less unemployment benefits and/or additional tax increases on employers which myself and many of my colleagues don’t support."

Rob Karr, CEO and president of the Illinois Retail Merchants Association, said taxes could increase by $500 million and $500 million in unemployment benefits could be cut, The Pantagraph reported.

“I think everybody agrees, whether you're on the employer side or the employee side, that given the current deficit, it's going to be near impossible to cut your way or to raise employer taxes to resolve the existing level of deficit,” Pat Devaney, secretary treasurer at the Illinois AFL-CIO federation of labor unions said, as reported by The Pantagraph. 

Elik suggested using money from the state's more than $5 billion in American Rescue Plan Act funding to pay down the deficit as a possible solution to the deficit problem.

"This is a result of bad fiscal management by the Democrat-controlled legislature and Gov. Pritzker," Elik told Metro East Sun. "The issue can be fixed if the state chooses to use a portion of American Rescue Plan Act funds to pay down the debt."

Republicans have also presented the possibility of ending the $300 weekly federal pandemic unemployment compensation program to incentivize people to return to the workforce, but Democrats have largely rejected those efforts. 

Illinois is one of 17 states with a trust fund deficit with a combined total of $54 billion in debt to the federal government.