State

Mendoza seeks break for Illinois on pandemic-loan interest

Illinois state Comptroller Susana Mendoza is among eight state financial officers urging the Treasury Department to reinstate interest-payment waivers on tens of billions of dollars loaned to states for unemployment rolls that exploded at the start of the COVID-19 pandemic

By JOHN O'CONNOR
FILE - In this Aug. 28, 2021 file photo, Illinois Comptroller Susana Mendoza speaks during Governor's Day at the Illinois State Fair in Springfield, Ill. Mendoza has teamed up with other state financial officers to urge the federal government to reinstate a waiver on interest due on the billions of dollars that Washington advanced for states to pay unemployment benefits during the pandemic.

FILE - In this Aug. 28, 2021 file photo, Illinois Comptroller Susana Mendoza speaks during Governor's Day at the Illinois State Fair in Springfield, Ill. Mendoza has teamed up with other state financial officers to urge the federal government to reinstate a waiver on interest due on the billions of dollars that Washington advanced for states to pay unemployment benefits during the pandemic. (Justin L. Fowler/The State Journal-Register via AP, File) (Justin L. Fowler/AP)

SPRINGFIELD, Ill. — (AP) — Illinois state Comptroller Susana Mendoza was among eight state financial officers on Monday urging the Treasury Department to reinstate interest-payment waivers on tens of billions of dollars loaned to states for unemployment rolls that exploded upon the debut of the COVID-19 pandemic.

Mendoza, a Democrat, was the lead signatory on a letter sent to Treasury Secretary Janet Yellen maintaining that the waiver's Sept. 6 expiration has added to the burden states face in determining how to pay back more than $39 billion loaned since the tragic early days of the pandemic, when many states virtually shut down, putting hundreds of thousands of out work.

“Taxpayers should not be on the hook for interest just because the pandemic is lasting longer than projected,” Mendoza said. “States are wrestling with how best to replenish their COVID-depleted unemployment funds and they should not have to do that with the meter running.”

Illinois must repay $4.5 billion the federal government has advanced since early 2020 for skyrocketing unemployment benefits. But with the waiver's sunset in September, Illinois has accrued $26.7 million in interest, of which $6.3 million has been paid. Interest must be reimbursed by Sept. 30, 2022, and could end up setting the state back $100 million.

Joining Mendoza in signing the letter were the chief financial officers of Colorado, Connecticut, New Jersey, New York, Massachusetts, Minnesota and Pennsylvania. All are run by Democratic governors except for Massachusetts, but a news release from Mendoza indicated she convened leaders of the hardest-hit states representing 75 million residents.

In the letter, the group maintains that “the waiver deadline was originally determined under the assumption that the pandemic would likely be over and that the economy and state governments would be in recovery mode.

“However, it is quite plain to see that this public health crisis is not over, and the benefit provided by this interest waiver is still necessary.”

The main irritant in facing renewed interest is that most states are still trying to determine how to repay billions of dollars in principal. The federal government prohibits repayment from the states' ordinary unemployment trust funds, which are subsidized by an assessment on employers. So they must find other parts of their budgets to squeeze out the debt.

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