Arizona Borrows $200 Million To Privately Pay Off Federal Debt

Arizona is borrowing $200 million this week in a bid to save business owners money. The state’s jobless fund is supposed to support itself with a tax on employers, but during the recession it went broke. The state then had to borrow $420 million from the feds. And, when Arizona couldn’t pay the debt last fall, employers were assessed an extra $21 per worker.

Mark Darmer of the Department of Economic Security says the assessment will double in November, unless the state privately borrows the money to pay off Uncle Sam right away. That, he says can be done without the $42 surcharge to employers.

“It's really more advantageous for the Arizona economy, for us to let the employers retain that money to be able to go out and hire additional staff rather than paying it to the federal government to just build a positive balance in the trust fund a lot sooner,” Darmer said.

He says employers will save $100 million by not being required to pay the surcharge. But, he says it’ll take the state longer to pay off the feds. That’s now expected to happen in the third quarter of next year.