HARRISBURG, Pa. (AP) — Pennsylvania has paid off $2.8 billion in bonds it issued in 2012 to retire a post-recession unemployment compensation debt that businesses owed to the federal government, state officials said this week.
The last installment, paid Jan. 1, completed the repayment on one of the largest such issuances in the state's history, if not the largest.
The unemployment compensation debt was originally owed by businesses to the federal government, built up by the huge wave of jobs lost in the recession. Lawmakers and then-Gov. Tom Corbett's administration in 2012 approved the bond issue as a way to repay what was nearly $4 billion in debt at a lower interest rate.
The total debt service on the unemployment compensation bonds with interest was $3.4 billion, Gov. Tom Wolf's administration said. Refinancing the debt saved employers approximately $57 million in interest costs, state officials said.
With the bond debt repaid, businesses will no longer pay a 1.1% interest factor assessed on their unemployment compensation taxes from 2013 through the end of last year, dropping the minimum unemployment compensation employer rate for 2020 from 2.4% to 1.3% and the maximum rate from 11% to 9.9%
The new employer rate will remain at 3.7%.
The 2012 law also changed eligibility rules to save $350 million a year, largely by barring jobless benefits for people who earn most of their annual income within three months.
Pennsylvania's debt stemmed partly from the fact that lawmakers for decades had not increased the tax structure that supported the state's unemployment trust fund, even though workers' salaries, which determine the amount of jobless benefits, had grown steadily.