By Kevin Haas
Rock River Current
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ROCKFORD — Restaurant owners here say they’re still waiting for relief from unemployment insurance rates that skyrocketed amid the coronavirus pandemic, costing some business owners tens of thousands of dollars.
The state made headway on the issue late last month by paying down the remaining $1.36 billion unemployment insurance trust fund debt, but several restaurateurs say that doesn’t fix the root cause of their increased rates.
They point to layoffs made in early 2021 as they complied with restrictions meant to curb the spread of the coronavirus. The state had frozen rates for part of the pandemic, but partial restaurant shutdowns remained in place longer than the rate freeze.
“We’re paying for all of these decisions that have nothing to do with our business, and all we did was abide by what the people we elect into power told us to do,” said Emily Hurd, the owner of The Norwegian, 1402 N. Main St. “It’s so much worse financially right now than it was during COVID because of how much money they’re coming to take now.”
State lawmakers wanted to prevent businesses from paying higher rates because of the pandemic-related closures, and they canceled any increase in the rates from March 15, 2020, to Jan. 2, 2021. However, it wasn’t until late January that year that indoor dining was allowed in northern Illinois, and at that point capacity was still limited to 25%.
Hurd saw her rates spike from less than 1% to the maximum rate of 7.625% in 2022. Then, her rates rose again this year as the max rate increased to 8.65%. She said she still has never made a layoff that wasn’t due to pandemic shutdowns.
The Norwegian survived an unexpected $85,000 bill from the Illinois Department of Employment security by holding fundraisers such as a T-shirt sale. It still has $20,000 to pay by April and will likely need to do more fundraising to cover it.
“What I really care about at this point is that we have staff that won’t have jobs if they do this, and that bothers me the most,” Hurd said. “We don’t carry hundreds of thousands in the bank to pay these things, everything we make is going back into staff’s hands.”
Restaurant owners started sounding the alarm to state lawmakers about six months ago after seeing the higher rates hit their bills.
“You can talk to any local elected political official about this — from the Republicans to the Democrats — and all of them are like, ‘this is a tragedy,'” said Josh Binning, the owner of Lucha Cantina, 1641 N. Alpine Road. “If all the elected officials all think this is a tragedy, then they can all get together and fix this.”
State’s next move
State Rep. Maurice West, a Democrat from Rockford, said he tried to work on legislation to help local restaurants, but there wasn’t an appetite for it in Springfield. That’s because lawmakers goal during the November veto session was to reach a deal to pay down the balance of the trust fund to save millions on future interest costs.
“The main mission was to pay off the debt,” West said. “What we needed to do to help the restaurants would have added to the debt.”
Lawmakers say unemployment insurance rates would have been even worse for restaurants if the debt wasn’t paid off.
“It would have been a lot, lot higher, and you would have heard a lot more complaints,” said state Sen. Steve Stadelman, a Loves Park Democrat. “The fact that we paid it off, and businesses don’t have to contribute even more to that fund, that’s going to prevent even bigger increases down the road.”
The state decided to contribute $1.8 billion from a revenue surplus to the unemployment insurance fund, with $1.36 billion going back to the federal government to repay money it borrowed during the worst of the pandemic. The remaining $450 million serves as an interest-free loan to the trust fund that is repaid over 10 years.
“This achievement will save Illinois businesses hundreds of millions of dollars over the next decade, and will save taxpayers $20 million in interest costs that would otherwise have been due next September,” Gov. JB Pritzker said in a statement in January.
West said his mission now is to find grant money that can help Rockford restaurants struggling to pay their increased rates. He plans to meet with local restaurant owners later this month.
Add it to the check
Binning, of Lucha Cantina, plans to be part of that meeting with West. He said the higher rates have cost his business tens of thousands of dollars, and he said most restaurants in the area face the same issue.
“It increases prices for the customers,” Binning said. “There’s only so much juice you can squeeze from the fruit that is the restaurant without the restaurants going out of business.”
The higher rates are another thing driving up restaurant prices, along with the increased cost of eggs, milk, cooking oil and other commodities.
“It’s a tax you’re paying on your check,” he said. “It goes right to the government.”
Zak Rotello, general manager of The Olympic Tavern, 2327 N. Main St., said the higher rates add another financial pressure to the restaurant industry that’s already been hit hard by inflation.
His rate also hit the maximum 8.65% this year, he said, despite his only layoffs being a part of the mandated shutdowns.
“We tried to do the right thing by our staff, which was get them all on unemployment as soon as possible because that was the instruction we got from the state of Illinois,” Rotello said. “But then two years later it seems like we’re being asked to pay for what they told us to do.”