by Todd DeFeo
Ohio voters could decide a constitutional amendment to cover the cost of unemployment payouts in the wake of the COVID-19 pandemic.
Senate Joint Resolution 4, if passed, would allow voters to decide whether to issue the bonds “to repay any federal borrowing in support of Ohio’s unemployment compensation program,” Ohio Senate President Pro Tempore Bob Peterson, R-Washington Court House, said during a Senate Finance Committee hearing.
More than 1.1 million Ohioans – about one-fifth of the state’s workforce – have filed initial unemployment claims with the Ohio Department of Job and Family Services, Peterson said. That equals the number of claims Ohioans filed during the past three years.
“The State of Ohio in the past two months has faced unprecedented challenges as a result of the current COVID-19 crisis,” Peterson said. “The spike in unemployment claims has put a significant strain on the state’s unemployment compensation fund.”
In March, Ohio’s unemployment rate increased to 5.5 percent from 4.1 percent, a level maintained for six months, Kimberly Murnieks, director of the state’s Office of Budget and Management said in a May 11 financial report. “The sharp rise in claims for unemployment compensation during the last two weeks of March and the continued elevated level through April and into early May indicates that employment has continued to fall.”
The federal government will loan unemployment funds to the state without interest for 12 months or more before charging interest. The state will use the bonds if the interest rate is lower than the federal government’s rate.
Ohio previously borrowed during the Great Recession, Peterson said during the committee hearing.
The bonds would be backed by employers, and the state would use fees from employers to retire the bonds. They are “not backed by the full faith and credit of the taxpayers,” Peterson said.
“The best thing we can do is get this economy going again, which is something we all want to do,” the lawmaker told committee members in response to a question from state Sen. Nickie Antonio, D-Lakewood.
Peterson told Senate Finance Committee the conversation is just beginning, so it remains to be seen precisely how much the state might borrow and how long it will take to repay the bonds.
“The resolution doesn’t solve the unemployment compensation issue, but it does implement a mechanism to make sure any borrowing is done at the lowest possible cost to Ohio businesses for the benefit of Ohio employers and Ohio employees,” Peterson said.
“I believe that this is a reasonable first step and starts the process of reforming our unemployment compensation system,” Peterson added. “This is the beginning of our work on this important issue, not the end.”
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Todd DeFeo is a contributor to The Center Square.