On August 10th Governor Steve Beshear announced that Kentucky had repaid the Title XII loan debt to the federal government. The payoff is expected to trigger a significant reduction in the Federal Unemployment Tax to be paid by employers on employment in Kentucky for 2015. Governor Beshear estimated that the payoff would result in a reduction in FUTA tax for Kentucky employers of $165 million.
The Governor acknowledged the work of state legislative leaders, business and organized labor in crafting legislation in 2010 and 2012 to gradually pay off the debt and interest on the debt after the great recession. He also noted that the state recognized the need to continue to improve solvency in anticipation of the next recession. See the link to the announcement at http://www.youtube.com/governorbeshear
Kentucky’s pay off leaves a shrinking number of states with outstanding Title XII loans and increased FUTA taxes; California, Connecticut, Indiana, Ohio, and the Virgin Islands.
Loan balances have been coming down due to increased FUTA deposits, increased taxable wages and reduced benefit outlays. Of the remaining states, Indiana is getting closer to being able to pay off the loan with some discussion of options to make payment before the November 10th deadline. States that pay off the outstanding loan balance before November 10, 2015 will qualify to eliminate the increased FUTA tax rate for the state.
UWC is tracking fund balances and state plans and we will have an update before and after the November 10th deadline.
