LANSING — The Michigan Manufacturers Association (MMA) announces its support of the State of Michigan’s early payoff of bonds issued in 2012 to stabilize Michigan’s unemployment program. The announcement of the bonds’ early retirement was made by the state’s Unemployment Insurance Agency (UIA) and signals the elimination of the Obligation Assessment (OA) — presenting employers with significant savings on their unemployment tax obligations.
The OA was part of an MMA-supported legislative solution to refinance more than $3 billion in state unemployment debt as a result of an unprecedented increase in unemployment claims following the Great Recession. MMA supported the move as an improvement in manufacturing competitiveness, freeing up capital for greater investment and job growth in Michigan.
“Long-term financing was absolutely the right solution to address the crisis-level financial insolvency in the Michigan Unemployment Insurance program. The investment in this solution prevented hundreds of millions in annual federal tax penalties, resulting in long term savings for employers financing the UI system,” said Delaney McKinley, MMA senior director of government affairs and membership. “But make no mistake, the Obligation Assessment has added significantly to unemployment costs for Michigan employers — nearly $455 million annually. The early retirement of these bonds creates a significant savings for employers.”
The OA represented an approximate increase of 37 percent above the $1.24 billion employers pay in state unemployment taxes each year.
Contact MMA’s Delaney McKinley, at 517-487-8530 or email@example.com, for more on this issue.