The Colorado legislature passed a bill during its special session that aims to return the state’s Unemployment Insurance Trust Fund to solvency.
The bill will allow employers to borrow money at about 1.5 percent through bonds from private investors to pay federal debt in the fund.
“Right now the unemployment insurance trust fund is about $230 million the red,” said Rep. Larry Liston, R-Colorado Springs, who sponsored the bill. “After this, we’ll be about $230,000 in the black.”
House Bill 1002 will allow employers to receive credit within their individual accounts for repayment of principal-related bonding amounts.
The idea behind the bond issue to reduce the amount of money the state is borrowing from the federal government to keep the fund solvent. By crediting employers for paying back into the system, the state should be able to encourage faster repayment schedules and reduce interest expenses.
It’s also expected to save employers $40 to $50 per employee by crediting employers’ bond repayments to their experience ratings, which lowers their unemployment taxes.
Unemployment insurance premiums have been rising rapidly during the last three years, according to a release from Governor John Hickenlooper’s office. The bill takes a step toward reduce those increases.
The bill was sponsored by Reps. Liston and Dan Pabon, D-Denver, as well as by Sen. Cheri Jahn, D-Wheat Ridge.
“The employers of Colorado probably don’t even realize we’ve done this yet,” Liston said. “But this is a huge bill for them.”