The Illinois Legislature has passed a new legislation that could save the state millions on unemployment insurance. The legislation is expected to net taxpayers’ savings of approximately $240 million and the state another $1.6 billion in federal taxes. The new legislation will allow the state’s Department of Employment Security to pay off some of the debt the state incurred from borrowing money from the Federal Unemployment Account in early 2008 in an effort to keep unemployment benefits afloat.
The new plan will reward businesses that have avoided layoffs with an unemployment insurance rate reduction of 16% on average. With the economy still reeling from the recession of 2008, this rate reduction will help companies grow without being burdened by what would seem to be insurmountable financial pressures. All of the businesses in the state will be contributing money to help pay back the $2.4 billion debt the state owes the Federal Unemployment Account.
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Legislators expect that the new unemployment insurance plan will help bring more jobs to the private sector. Businesses may be more inclined to hire given the new law, as it will help them take advantage of new tax cuts though they will continue paying into the state’s unemployment insurance fund.
Illinois plans to pay off its debt to the Federal Unemployment Account before the January 1 deadline. If unsuccessful, however, the state will be liable for approximate $88 million in fines.