COLUMBUS—State Senator Bob Peterson (R-Washington Court House) today announced that the Senate unanimously passed legislation that permits Ohio to issue bonds in order to repay federal loans to the unemployment compensation system, ensuring that when Ohio needs to borrow money, it does so in the cheapest way possible.
When a state does not have enough money in its unemployment compensation fund to pay out unemployment benefits, the federal government loans the state money through advances that must be paid off. Due to the high unemployment claims resulting from the COVID-19 pandemic, Governor DeWine this week requested a line of credit from the U.S. Department of Labor in order to keep Ohio’s unemployment compensation system solvent.
Senate Joint Resolution 4 would ask voters in the November general election to vote to allow the issuance of bonds to repay this federal borrowing at the lowest cost possible.
"Our state has faced unprecedented challenges as a result of the COVID-19 crisis, including over 1.2 million Ohioans needing to file for unemployment benefits," Peterson said. " The passage of this resolution does not solve our unemployment compensation system challenges, but it does implement a mechanism to make sure any borrowing is done at the lowest possible cost to Ohio employers and to the benefit of everyone. I believe that this is a reasonable first step in starting the process of reforming our unemployment compensation system."
Other states, such as Texas, have used this type of unemployment model successfully in the past. These bonds will be retired by fees paid for by employers subject to Ohio's unemployment laws. Keeping these costs low for employers allows them to invest more into hiring and expansion.