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Hoosier Businesses Help Foot Bill For Unemployment Shortfall

Indiana borrowed billions of dollars from the federal government to help pay unemployment benefits in the middle of the recession. Now for the fourth year in a row, the state doesn't have enough money to pay that loan back.
Tis the season for giving, but perhaps not this way. Some Indiana businesses could get hit hard by an upcoming involuntary fee. The state borrowed billions of dollars from the federal government to help pay unemployment benefits in the middle of the recession. Now for the fourth year in a row, the state doesn't have enough money to pay that loan back. It's once again looking to the private sector for help.

It's a one time payment just in time for the Christmas holiday. "When these surprises come along they always seem to hit you at the wrong time," says John Friend, owner of John Friend and Company.

When he's not serving on Evansville City Council, John Friend manages his own accounting firm. The "surprise payment" brings a sense of deja vu -- he's one of thousands of business owners who have had to reach into their pockets over the past few years to help the Hoosier state pay back the federal government.

"As accountants we thought we were gonna pay that off but actually it's going in the wrong way because the next year it came 0.9%," said Friend.

Friend says the state borrowed around $2 billion from the federal government this year. Now business owners are being asked to dig even deeper into their pockets.

"What I'm concerned about is the way it's growing," said Friend. "That just doesn't help Indiana. It doesn't help our ability to grow jobs."

In 2010 the state's credit reduction rate was 0.3-percent. In 2011 it doubled to 0.6-percent, and last year it rose to 0.9-percent. This year, in 2013, the rate took yet another jump. It's now at 1.2-percent -- the rate has quadrupled since 2010. It ranks the highest in the country.

"The unfortunate thing about it is you get these things right at Christmas time," said Friend, who suggests a business with around 10 employees will likely end up paying around a thousand dollars to help the state foot the bill.

To help ease the pain on small business owners' billfolds, Friend says he'd like to see the state allow business owners to make estimated quarterly payments toward the state's unemployment fund shortfall. Even still, he says that's not a permanent solution. "We have to do whatever it takes to bring businesses to Indiana to get more people employed -- paying more into that fund. If that happens hopefully we'll pay it off faster."
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