By Adam Andrzejewzski
RealClear Policy, -- September
20, 2021 -- While unemployment checks seem to magically appear in bank accounts
every month for millions of Americans collecting the benefits, that money comes
with major strings attached for the states funding them.
Ten states and U.S. Virgin Islands owe
the federal government $45.6 billion for unemployment funds — at an interest
rate of 2.3 percent.
These states owe more than $1 billion
per year in interest payments alone.
When states ran out of their own money,
Uncle Sam lent them cash to pay their out-of-work residents — called Title XII
advances — money initially coming interest-free. But starting Sept. 13, the
remaining balances must be paid with interest, according to reporting at Route-Fifty.com.
Now 10 states must cough up what they
owe with interest — California, $19.5 billion plus interest; Colorado $1
billion; Connecticut $725,000; Illinois $4.2 billion; Massachusetts $2.3
billion; Minnesota $1 billion; New Jersey $193,000; New York $8.9 billion;
Pennsylvania $721,000; Texas $6.9 billion; and the U.S. territory, the Virgin
Islands $96,000.
Ohio, Hawaii, Nevada, and West Virginia
recently paid off their debts before the interest kicked in, with some states
using funds from the American Rescue Plan Act to repay the loans.
Since unemployment benefits are funded
by taxes levied on businesses, those 10 states could see big tax hikes on
employers next year.
California state government declared a
$75 billion budget surplus last year. Colorado declared a $3.8 billion budget
surplus last year. So, why do these states owe the federal government for
unemployment benefits?
The vicious cycle of borrowing,
spending, and hiking taxes is not only a waste of taxpayer money. It's a cycle
that’s avoidable with responsible government.
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