Kentucky Makes Interest Payment On Federal Loan

{Kentucky}...Governor Steve Beshear announced late Thursday that the state has made a $28 million interest payment on a loan from the federal government. The interest payment was due by September 30th on about $948 million Kentucky has borrowed over the last three years to pay unemployment benefits. Failure to make the interest payment on time would have resulted in federal penalties that include the loss of an unemployment tax credit worth $400 per employee to Kentucky businesses. The total tab for the loss of that credit to all Kentucky businesses was estimated to exceed $600 million. Beshear authorized the commonwealth to borrow $18 million from itself to help make the interest payment, a move Senate President David Williams said the govornor lacked the authority to make. State law mandates that interest payments on the federal loan must come from the state’s Unemployment Insurance Penalty and Interest Account. That account has had a balance of about $10 million. Beshear says he authorized a loan of $18 million from the state’s “overall cash flow” to the Unemployment Insurance Penalty and Interest Account.