Illinois has just become the 16th state forced to borrow money from the federal government to pay unemployment insurance benefits because its trust fund has run dry.
The roughly $34.7 million Illinois has borrowed so far pales in comparison to the unemployment insurance debt of states like neighboring Michigan, which has borrowed $2.2 billion so far.
But since Illinois, like many states, received most of its unemployment insurance revenue in the first two quarters of the year, the borrowing has probably only just begun.
"The borrowing is a result of the national economic challenge," a state workforce department spokesman told Crain's Chicago Business.
Going into the recession, Illinois had a dangerously low level of reserves, a situation that's gone on for years. Indeed, Illinois was forced to borrow federal money in 2005, relatively good economic times.
To make matters worse, the tax rate on employers was not high enough to sustain benefits paid, let alone to accumulate a safe level of reserves to prepare it for a recession -- even one much milder than the current train wreck. The red line is what the Department of Labor estimated a sustainable tax rate to be. The yellow line is the average tax rate Illinois employers paid.