Illinois unemployment insurance gap to be filled by COVID funds under new legislation

The legislative action came Wednesday night on a largely party-line 68-43 roll call, when the House voted to allot $2.7 billion of the state’s remaining $3.5 billion in ARPA funds to fill a $4.5 billion gap in the trust fund that covers unemployment claims within the state. The Senate had passed $2 billion earlier, but called that a placeholder. 

A spokesman for Gov. J.B. Pritzker confirmed that he supports the $2.7 billion figure allocated in the legislation, but House GOP leaders and gubernatorial hopeful Richard Irvin charged that the state should allot all $3.5 billion in available ARPA money. 

Pritzker’s office says negotiations on how to fill the remainder are continuing, but business sources say talks have broken off indefinitely and that, in the absence of renewed negotiations, employers will be hit with an additional $509 million a year in tax hikes until the deficit is completely eliminated. 

Illinois’ unemployment insurance trust fund is financed primarily by employers through the payroll taxes they pay for each employee. A flood of new unemployment claims filed during the worst of the COVID downturn rapidly drained the fund’s reserves.

The unemployment insurance issue was tied to a larger bill involving other state money, for instance, $300 million for pension reserves. The bill will have to go back to the Senate for concurrence.