Ky. senators consider unemployment insurance loans

FRANKFORT, Ky. (AP) -- Kentucky employers could avoid having to pay millions of dollars in unemployment insurance tax under a House bill that's expected to be voted on Thursday in the Senate.

The proposal by House Speaker Pro Tem Larry Clark, D-Louisville Democrat, would allow the state to borrow money to pay the interest on approximately $960 million in federal loans that kept the state's unemployment insurance program afloat during the recession.

After the bill was discussed in the Senate Judiciary Committee Wednesday morning, the Senate sponsor, Sen. David Givens, R-Greensburg, met with Education and Workforce Development Cabinet Secretary Joseph Meyer and reached an agreement, which was brought back before the committee Wednesday afternoon. The bill was amended and placed on the Senate's calendar for Thursday, to be voted on without discussion.

Clark's original bill would have allowed the state to sell a revenue bond to provide money to make the interest payments for 2011-13. If the state doesn't make those payments by Sept. 30, Clark said, the unemployment insurance tax per employer would increase from $63 to $422 per worker next year.

The bill passed the House by a vote of 97-0 on March 14.

The state made one interest payment of about $18 million last fall, Givens said.

"The legislation puts in place a mechanism where we can borrow, temporarily, what may well be referred to as a bridge loan to continue making interest payments and to backfill the interest payment the governor made in the fall of last year," Givens said in an interview.

Givens said Wednesday afternoon the Senate version of the bill keeps intact the House proposal and imposes a $21-per-employee surcharge to pay the interest on the new loan beginning in 2013.

The surcharge, he said, "will pay the interest on the borrowings as we go forward" for the next three to five years "depending on the amount of time we have on the loan."

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The legislation is HB 495.