Addressing a long standing OMA goal, the House, Senate, and Kasich administration this week outlined a tentative plan to pay off the state’s $315M unemployment compensation debt owed to the federal government.
The debt has triggered increasing yearly penalties on employers’ FUTA taxes. Paying off the debt will eliminate the federal penalties. Thus, employers will see their FUTA tax per employee drop from a projected $168 per year to the standard $42 per employee.
Under the plan, the state would retire the debt through a loan from state coffers that will be repaid by employer surcharges next year. Surcharges are estimated to be $45-50 per employee. Thus, employers will have a net savings of $75 per employee in 2017.
Legislation will be introduced and passed next week to execute the plan.
With the debt soon to be retired, the state must now focus on making the Ohio unemployment compensation system actuarially sound by passing House Bill 394; its solvency measures will help ensure that Ohio does not have to borrow such sums again in the future.