Dear Hoosier Employer,
The lingering effects of the
Great Recession could still be felt every year when your Federal Unemployment
Tax Act (FUTA) tax bill became due. As you probably know, Indiana began
borrowing from the federal government to pay unemployment insurance (UI) benefits
in November, 2008. Two years later, Indiana qualified as a “Credit Reduction
State”, meaning the State had been borrowing from the federal government to pay
UI benefits for two consecutive years. In order to pay the principal of the
loan, FUTA tax credits were decreased by the federal government, resulting in a
tax increase to Hoosier employers. This was not just an Indiana issue, however.
Over the past few years, 32 states have borrowed from the federal government to
pay unemployment benefits, many also incurring tax increases or other fees to
pay off their outstanding loans.
Last fall, however, I was honored
to participate with Governor Pence and key members of the Indiana General
Assembly Senator Luke Kenley and Representative Dan Leonard in announcing that
the State of Indiana, due to our solid fiscal standing, was able to advance
Indiana’s Unemployment Insurance Trust Fund a $250 million short-term loan to
pay off the past due balance. As a result, Hoosier business owners, small and
large, will avoid a $327 million federal tax increase in 2016, which would have
amounted to an additional $126 per employee in FUTA taxes. Instead, Hoosier
employers will be able to hire additional workers, give raises to deserving
hard-working employees, or even add capital to expand.
In November the Indiana
Department of Workforce Development forwarded the proceeds of the short-term
loan from the state to the federal government to pay off Indiana’s remaining
balance of our Trust Fund loan, capping off several years of diligent work by
the Administration, the General assembly, and the Department itself. Moreover,
as the Department will be able to pay back the short term loan from the state in
the same fiscal year, there will be no cost, no threat to Indiana’s solid
credit rating, or difficult funding priority decisions to make. Finally, when
you receive your FUTA tax bill this year, you will see first-hand Hoosier
prudent fiscal management that states all over the country continually try to
emulate year in and out.
Thank you for all the hard work
you do every day to keep the Hoosier economic engine running. If I can ever be
of service to you, do not hesitate to contact me.
Best Wishes,
Steven J. Braun, Commissioner
Indiana Department of Workforce Development
