The Associated Press has an article on Indiana’s obligation to pay penalties and interest on the loans for the State’s unemployment insurance shortfall.
The state will begin paying millions of dollars in penalties and interest to the federal government next year because it has borrowed nearly $2 billion to pay for jobless benefits, an Indiana unemployment official says.
. . .
[T]he state will have to pay $80 million to $100 million in interest in 2011. The first payment of about $60 million will be due Sept. 30.The Journal Gazette of Fort Wayne and The Times of Munster reported that Indiana businesses in January also will begin paying a penalty of $21 per worker because Indiana has not yet repaid the loans. The business penalty increases by $21 per worker per year until the loan is nearly paid off.
We’re hardly the only state having economic trouble, but if you hear folks saying that our state budget is balanced, it’s only because their squinting and turning their head just right when they look at it.
Lots of other states have borrowed money to pay for unemployment insurance, but our per capita borrowing is ridiculously high, and we’re one of only 3 states facing penalties and interest on the debt.
I’ve been flogging this story for a while, so I’m glad to see the AP & other news agencies are starting to take notice.
Once again, it’s worse than that.
You know that Mitch goes around boasting that he didn’t raise taxes, right?
Funny how I pay a 7% sales tax this year, when I only paid 6% a couple of years ago.
And, I’m guessing that the pension obligations aren’t any better funded than they were when I was working for the State 11 years ago.
Every one of those pro-mitch for president articles published by barone, the nation, cal thomas etc all say that Indiana has a balanced budget under mitch. How can they keep overlooking this nagging hole of 2 billion? Is it even listed in the budget? If not, how can bosma say they passed an honestly balanced budget? These people around mitch have no shame, they lie about anything and everything and keep putting money in their pockets at the expense of working people, the poor, the young, and the elderly. mitch, bad for Hoosiers, bad for America! Watch out for tax caps–once they have these in the constitution, these honest guys will no longer have to be responsible for tax increases–they can “honestly” raise state revenues from property taxes without increasing the tax rate, they will let locals increase assessed value. Reap the rewards, blame the locals.
So by employing Daniels Campaign Math™–the technique which turned an (admittedly somewhat deceptive, though bi-partisan) accounting technique into a $200, then $500, then $800M deficit, depending on who was telling the story, when he was telling it, and how big he needed the Miracle to be–are we now justified in saying that Daniels has increased the budget deficit eightfold?
Akla, don’t forget that the Bantam Menace himself claims he’s accomplished this Miracle “without raising taxes”, in the state which has had the greatest total tax increase east of the Mississippi the past few years. Anybody who lived through the Reagan administration knew exactly what sort of PR shenanigans he was up to, right off the bat; anybody who believed that one session of the Indiana General Assembly had turned a half-billion dollar deficit into a surplus with an across-the-board cut is too credulous to cross the street unassisted.
On the Balance Budget theme of pensions—the “unfunded liabilities” for teachers, police, etc. exceeds 10 Billion by latest figures I have seen. In Indiana, the state can not be in debt but if I “deferred payment” of my debts the courts would surely rule them as being a debt. Now there are efforts to transfer some of these “deferred payments” back to local communities–which as we know the state in its wisdom has thrown Indiana’s status as “home rule” out the window and set up many limits on local ability to tax and local units have to have state approval of appropriations, etc. –yet the state (and federal) can mandate local actions without any allowance for how to fund except “local government” is inefficient so should just cut back somewhere.
Also known as the concept that “shit runs downhill.”
[I also posted this on Terry Burns’ Indianapolis Times website, but wanted to provide this information again. Sorry to repeat used information, Doug, but I felt like being lazy! Thanks for posting the AP story on your blog – it’s great to see bloggers mention it.]
Actually, the unemployment trust fund debt is not related to the state’s budget, so fortunately (very fortunately) for Governor Daniels he does not have to worry about this giant black hole for Indiana right now.
However, the problems only begin there for the governor. See the full story from Niki Kelly, who was one of only two reporters at the State House last Wednesday for the Unemployment Insurance Oversight, for additional information: http://www.journalgazette.net/article/20101014/NEWS07/310149979/1002/LOCAL. What might be eventually affecting the state’s budget as soon as September 2011 will be the payment of interest to the federal government in the amount of up to $100 million (just for next year alone). And that money cannot come from unemployment taxes, so it has to come from either the general fund or raising taxes. Couple this disaster with the charging Indiana employers with $21 per employee next year (because Indiana was the second state in the country to have a bankrupted Trust Fund in this recession), and all the sudden Indiana is not such a business friendly state, is it? The interest will keep climbing as the Trust Fund debt keeps climbing, and the $21 per employee per year federal tax will also increase every year until the debt is almost paid down.
The governor keeps hoping for Congress to bail-out his trust fund problem by not charging interest and hoping the bulk or whole of the trust fund debt is relieved. Daniels’ problem is he has allowed his Department of Workforce Development to run an incompetent and negligent unemployment program (but he’s not ignorant, he knows it’s been bad because he fired Teresa Voors earlier this year when she was three-months pregnant).
How bad has DWD botched the unemployment program? DWD has a modernization program run over two years and millions of dollars over budget, with yet another push-back date for completion set for early next year. DWD has consistently failed to meet timeliness and quality standards as set by the US Department of Labor. DWD has consistently bypassed or even broken state laws in order to skirt the negative issues caused by the failure of a modernization program.
In 2009, Indiana was estimated to have overpaid claimants by $626 million, more than any other state in the country; of this amount, DWD was responsible for $497 million, also the most in the country. From 2006 to 2009, Indiana overpaid claimants $1.157 BILLION (third most in the country), and DWD was responsible for $859 million of that amount (most in the country, by far and away).
The main reason these errors are so high is because DWD consistently does not enforce its own state laws and policies. The people who have to pay are Indiana businesses for this debacle as outlined in the news stories. Down the line, we may all pay for it, though.
If anybody wants further information, just say something on here and I’ll provide more.