Chambana Sun

The COVID-19 pandemic caused an unprecedented flood of unemployment claims that overwhelmed Illinois' Unemployment Insurance Trust Fund which is now facing a deficit that could rise to $5 billion.

State Rep. Brad Halbrook (R-Shelbyville) gave his thoughts on the deficit and how it got so bad.

"Businesses have struggled in the last year through no fault of their own," Halbrook told the Chambana Sun. "Governor Pritzker locked down our economy, forcing businesses to close their doors, leaving millions of Illinois residents out of work. The lockdown of our economy was not something anyone saw coming and the Illinois Unemployment Insurance Trust Fund is being drained as a result. State government needs to address these concerns."

Halbrook calls the deficit a 'manufactured crisis.'

"The Illinois Unemployment Insurance Trust Fund was never intended to handle unemployment on the scale of what happened last year," Halbrook said. "Obviously, there are ups and downs in our economy, but what happened last year was not the result of the marketplace. It was a manufactured crisis. People lost their jobs because the governor told businesses to close. The Illinois Unemployment Insurance Trust Fund is going broke because of what Gov. Pritzker did to our economy.  The State of Illinois needs to make this right and pony up for the losses to the Fund the Governor caused."

Halbrook suggested using money from the state's more than $5 billion in American Rescue Plan Act funding to pay down the deficit as a possible solution to the deficit problem.

"We have some federal funds coming that could be used to shore up the fund," Halbrook told Chambana Sun. "What we don’t need to do is hit businesses with massive tax increases while they are in the process of getting their businesses back up and running."

The state's Unemployment Insurance Trust Fund is a safety net that is normally funded by businesses through insurance premiums collected via payroll taxes, according to The Pantagraph. When the fund doesn't have enough to pay out unemployment benefits, the state can borrow from the federal government through a Title XII advance to pay unemployment claims.

Due to the massive number of unemployment claims brought on by the economic impacts of the pandemic, the state currently owes the federal government $4.2 billion to cover the Unemployment Insurance Trust Fund. That number is expected to rise to over $5 billion this year as the state's unemployment rate remains high, hovering at 7.1% as of last May.

Rob Karr, CEO and president of the Illinois Retail Merchants Association, said taxes could increase by $500 million and $500 million in unemployment benefits could be cut, The Pantagraph reported.

“I think everybody agrees, whether you're on the employer side or the employee side, that given the current deficit, it's going to be near impossible to cut your way or to raise employer taxes to resolve the existing level of deficit,” Pat Devaney, secretary treasurer at the Illinois AFL-CIO federation of labor unions said, as reported by The Pantagraph. 

Republicans have also presented the possibility of ending the $300 weekly federal pandemic unemployment compensation program to incentivize people to return to the workforce, but Democrats have largely rejected those efforts.