Chafee and DLT to announce early repayment of federal UI loans

Updated 2:25 p.m.
PROVIDENCE – Gov. Lincoln D. Chafee and R.I. Department of Labor and Training Director Charles J. Fogarty said Monday afternoon that funds that the state borrowed to cover unemployment insurance benefit payments will be paid back six months early.
The officials made the announcement at 1 p.m. at the state department’s office on Pontiac Avenue in Cranston.
Since March 2009, the U.S. Treasury had loaned the state $905 million to assist unemployed Rhode Islanders through the recession.
With the final payment of $2,690,368.70 to the U.S. Treasury six months early, businesses will save more than $50 million in 2015 – including $36 million in Federal Unemployment Tax Act payments and $14.5 million in interest assessment taxes. Rhode Island’s 32,000 employers — who pay for the Unemployment Insurance Trust Fund — will save $45 million more in FUTA taxes in 2016, according to information from the governor’s office.
“This is a big win for Rhode Islanders and our business community,” Chafee said. “In 2011, my administration faced a huge challenge with an insolvent unemployment insurance system, an existing UI loan and a lack of a plan to repair the system or repay the loan. By borrowing from Treasury, we spared the business community the burden of repaying the loan. That was our only course of action acceptable to me.”
In 2009, the state’s UI trust fund became insolvent due to the abnormally high unemployment rate following the 2008 recession. Rhode Island, along with 29 other states, had to borrow from the federal government to make UI payments, and the outstanding loan balance peaked at $290 million in April 2012.

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