(Chicago, IL) — July 10, 2010. Governor Pat Quinn is staring at another debt bomb.
While Quinn has been struggling to pay nearly $6 billion in unpaid bills to state vendors and wrestling with a potential $4.1 billion loan to pay Illinois’ pension systems, Illinois has quietly borrowed billions from the federal government to replenish its empty unemployment trust fund.
As of June 7, 2010, Illinois owes the feds $2,240 billion, with interest. Among the 32 states that have borrowed money, Illinois has been the sixth largest borrower. California ranks number one, owing $7,121 billion to the U.S.
Collectively, the 32 states owe the federal government nearly $38 billion, according to a new report by the Council of State Governments.
The U.S. Labor Department estimates that by late 2013 as many as 40 states will need to borrow $90 billion.
To plug the unemployment fund budget holes, 35 states increases taxes on employers and a seven raised the taxable wage base. Illinois raised its taxable wage base from $12,300 in 2009 to $12,520 in 2010.
The law prohibits states from repaying the interest from unemployment insurance revenue. The interest must be repaid with general revenue or other money. To pay the bill, Quinn will need to cut further education, human services and other programs or seek a tax increase on Illinois businesses.
Tick, tick, tick …