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Nixon: Mo. to pay off unemployment debt early

Nixon: Mo. to pay off unemployment debt early

January 29th, 2014 in News

JEFFERSON CITY (AP) - Gov. Jay Nixon said Tuesday that Missouri employers would save $186 million on federal unemployment taxes because the state is projected to repay money early that was borrowed from the federal government to pay jobless benefits.

The state is expected to pay off the debt in November instead of May 2015, and Nixon said that would reduce the federal tax by $84 per employee.

"This is really, really good news that because of the economy getting back up to speed, we're seeing an accelerated drop in debt," Nixon said.

The governor said the revised projection came from the U.S. Department of Labor.

Missouri's Unemployment Insurance Trust Fund became insolvent in February 2009, and officials say Missouri borrowed more than $1 billion since then to continue paying unemployment benefits. The current loan balance is $321 million.

The federal unemployment tax rate is 6 percent, but businesses that pay their state unemployment tax timely and in full get a 5.4 percent credit. However, the amount of that credit is reduced to pay off the debt when states borrow to shore up their unemployment trust fund.