GRAND JUNCTION, Colo. (AP) – Colorado is turning to business owners to cover interest on a federal loan used to cover unemployment benefits.
Colorado has borrowed some $276 million since January of 2010 to cover unemployment benefits. Businesses will begin receiving letters this month detailing how much they have to pay to help cover $12 million in interest. The payment is due Oct. 1.
Nancy McCabe of the Colorado Department of Labor and Employment told The (Grand Junction) Sentinel that about 35,000 businesses will be billed an average payment of $340.
The added charge didn’t concern Bruce Benge, owner of Benge’s Shoe Store in Grand Junction.
“There’s not much you can do about it,” he said.
The average charge for the federal interest repayment will be smaller than the amount most Colorado businesses are tasked to contribute to the state unemployment trust fund each year. That tax can reach thousands of dollars. Benge said he doesn’t think $340 will make much of a dent in companies’ budgets.
“If that is going to make or break you, you’re probably not running a great business anyway,” he said.
Each employer who pays into the state’s unemployment trust fund will have 30 days from the day they get their bill to pay their share of the $12 million interest payment that made it possible for the state to pay unemployment benefits during the first four months of this year.
More interest payments are expected. The state has an Oct. 1 deadline for making the first interest payment to the federal government.
Colorado began borrowing from the federal government in January 2010, but the state didn’t pay interest on the loan last year because Congress waived the payment.
It’s common to waive interest on an unemployment-trust-fund loan, according to Rick Genova, a certified public accountant with Chadwick Steinkirchner Davis & Co. in Grand Junction. But the number of states currently paying back the federal government, 29, is a large one, and the $40.9 billion in outstanding debt for state unemployment funds has led to an exception to the unwritten rule.
Colorado’s debt is smaller than 19 other states, according to the National Conference of State Legislatures.
California leads the list of states in debt to the federal government for loans that filled their unemployment-fund coffers. The Golden State owes nearly $11 billion, followed by Pennsylvania, which owes $3.76 billion, and Michigan, which owes $3.19 billion.
(Copyright 2011 by The Associated Press. All Rights Reserved.)