Unemployment fund interest payments coming for employers
Colorado businesses will begin receiving letters this month detailing how much they have to pay to help cover interest on federal loans the state received in order to keep doling out unemployment benefits.
Each employer who pays into the state’s unemployment trust fund will have 30 days from the day they get their bill to pay their share of the $12 million interest payment that made it possible for the state to pay unemployment benefits during the first four months of this year.
More interest payments are expected, according to Colorado Department of Labor and Employment worker Nancy McCabe, who works with employers to figure out their premiums. McCabe said she is not sure when the next interest payment will be due or how many months it will cover. The state has an Oct. 1 deadline for making the first interest payment to the federal government.
The average payment for all but a few exempt organizations, including state-run businesses, will be $340, given about 35,000 Colorado businesses will be billed. McCabe said the department is still figuring out how much each employer will pay for their share of the interest charge, based on the interest amount and wages paid to each business’s employees. She expects those numbers to be sorted out by the middle of this month.
The added charge doesn’t concern Bruce Benge, owner of Benge’s Shoe Store, 514 Main St.
“There’s not much you can do about it,” he said.
The average charge for the federal interest repayment will be smaller than the amount most Colorado businesses are tasked to contribute to the state unemployment trust fund each year. That tax can reach thousands of dollars. Benge said he doesn’t think $340 will make much of a dent in companies’ budgets.
“If that is going to make or break you, you’re probably not running a great business anyway,” he said.
Colorado began borrowing from the federal government in January 2010, but the state didn’t pay interest on the loan last year because Congress waived the payment. It’s common to waive interest on an unemployment-trust-fund loan, according to Rick Genova, a certified public accountant with Chadwick Steinkirchner Davis & Co. in the Alpine Bank building downtown. But the number of states currently paying back the federal government, 29, is a large one, and the $40.9 billion in outstanding debt for state unemployment funds has led to an exception to the unwritten rule.
Colorado owed the federal government $276 million as of June 14, according to the National Conference of State Legislatures. Its debt is smaller than 19 other states.
California leads the list of states in debt to the federal government for loans that filled their unemployment-fund coffers. The Golden State owes nearly $11 billion, followed by Pennsylvania, which owes $3.76 billion, and Michigan, which owes $3.19 billion.
“Michigan has more of a problem than Colorado” when it comes to paying off interest, Genova said.