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House Committee Passes Unemployment Insurance Fix

A compromise to help employers avoid high federal unemployment insurance taxes has easily cleared a House committee.

The proposal would allow Kentucky to borrow money from a bank or other organization to repay federal loans. Kentucky borrowed nearly one billion dollars from the federal government to pay for unemployment insurance during the recession.

Up until now, the state had no plan on how to keep up with interest payments on that loan. If the state is late on payments, the federal government can put a higher tax on employers to recoup the funds.

Gay Dwyer of the Kentucky Retail Federation says the compromise bill is needed to keep enormous taxes off employers.

"If it's not made, we lose our complete federal tax credit which means our federal unemployment taxes will go from what has been $42 an employee to $420 an employee. That's simply not acceptable," she says.

The compromise was hatched between lawmakers, business leaders and labor groups. After two years, employers will have to pay the state, not the federal government, back for the bank loan allowed for in the bill.

Bob Weiss of the Kentucky Home Builders Association says passage of House Bill 495 is essential.

"So there is a situation of urgency here, we have to get these things done to help protect the employers. We have to pay back this money. It doesn't matter how we got into the situation," he says.

The bill passed unanimously out of committee and now heads to the House floor.

Kenny Colston is the Frankfort Bureau Chief for Kentucky Public Radio (a collaborative effort of public radio stations in Kentucky). Colston has covered Kentucky's Capitol and state government since 2010. He is a Louisville native, and a graduate of the University of Kentucky. When he's not tracking down stories about Kentucky politics, you can often find him watching college sports, particularly football.
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