Lawmakers are "elated" after Gov. Eric Holcomb announced he’d move $400 million of CARES Act funding to unemployment insurance. They hope to avoid federal penalties that would be incurred by Hoosier employers.
Throughout the pandemic, Indiana paid out all of the money it had – a little less than $1 billion – in a rainy day fund meant for unemployed workers. To continue paying unemployment benefits, the state began borrowing money from the federal government.
If it doesn’t repay that money within two consecutive years, a federal tax break for employers would be rolled back. Employers currently pay $21 in federal taxes for each worker making at least $7,000. The rollback would double, and then triple, that payroll tax each year it isn't paid off.
Rep. Dan Leonard (R-Huntington) said the fund is currently about $200 million in debt. With the governor’s appropriation of $400 million, he hopes that will be enough to avoid a raise in employer taxes.
“I’m just elated,” he said. “I think it helps employers out so I think it was a wise use of the money.”
The latest relief bill in Congress also seeks to remove interest rates on the borrowed money until March 2021.