See below for the full letter from the Tax Enforcement Branch of the Division of Unemployment Insurance.
The Division of Unemployment Insurance has determined that under the provisions of KRS 341.614 as related to the surcharge it has collected enough funds to meet the interest payments due on our outstanding loans from the prior insolvency of the Unemployment Insurance Trust Fund. As a result the Secretary is suspending the surcharge assessment beginning with the 3rd quarter of 2016 reporting period.
Beginning in January 2009 Kentucky – along with roughly half of U.S. states – borrowed funds from the federal government to pay UI benefits. Eventually this borrowing (formally referred to as a Title XII advance) reached nearly $1 billion. Additionally the state needed funds to repay approximately $55 million in interest which by law could not be funded through the regular unemployment insurance tax.
The Kentucky business community came together and agreed to pay an additional assessment to pay off the deficit and interest. The surcharge was enacted by the Kentucky General Assembly in 2012 in House Bill 495 and the surcharge was first assessed in the 1st quarter of 2014.
The principle of the loan was paid off in 2015. Today Secretary Heiner is pleased to advise you that sufficient funds have been collected through the surcharge to pay the interest owed. As a result the surcharge assessment will conclude at the end of the 2nd quarter of 2016 and the current statement you are receiving for the 3rd quarter will reflect a 0% surcharge assessment.
Any delinquent or uncollected surcharge from earlier reporting periods will still be due and collected by the Division.