The Indiana State Budget Committee has approved $250 million to pay off a federal unemployment loan early. The committee says the payment allows the state and Hoosier employers to avoid more than $300 million in tax penalties.
Indiana had to take out the loan during the recession, when the state’s Unemployment Insurance Trust Fund could no longer meet demand. Committee members say that led to a $2 billion debt to the federal government.
The early repayment option is available because of a loan from the state’s general fund to the Unemployment Insurance Trust Fund. That money is expected to be made up by the first half of 2016 by state unemployment insurance tax revenues.
The loan would have come due on November 10.