Crystal Douglas, the owner of Wired Cafe, helps a customer on Friday, May 26, 2023, at her shop at 414 E. State St. in Rockford. (Photo by Kevin Haas/Rock River Current)

By Kevin Haas
Rock River Current
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ROCKFORD — The newly passed state budget includes $1.5 million to provide relief to restaurants in the city who saw their unemployment insurance rates surge, in some cases by a multiple of seven, because of layoffs made during the coronavirus lockdowns.

State Rep. Maurice West, a Democrat who represents Rockford, pushed to include the money in the state budget after his efforts to pass legislation that would have reduced local restaurants rates didn’t garner enough support. West said the next step is to work with the Illinois Department of Commerce and Economic Opportunity to make sure the money is available shortly after the budget goes into effect July 1, and he wants to make applying for the funds as smooth a process as possible.

“State government can work slow when it comes to allocating funds. We can’t be slow on this. This was needed months ago,” West said in a phone interview with the Rock River Current. “I’m celebrating this win, but only for a couple of days because after the Memorial Day weekend I need to get back on that grind with DCEO to make sure we can get this out.

“I’m not done yet. This is the first step.”

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Restaurant owners in Rockford started sounding the alarm to state lawmakers last August once the higher rates started to hit their bills. They pointed to layoffs made in early 2021 in order to comply with business restrictions meant to curb the spread of the coronavirus.

Those layoffs were never intended to affect restaurants rates, but they did because of the timing of reopenings here.

State lawmakers had canceled any increase in unemployment rates from March 15, 2020, to Jan. 2, 2021, to protect businesses from paying more for layoffs forced by lockdowns. However, it wasn’t until late January 2021 that indoor dining was permitted in northern Illinois, and even then capacity was limited to 25% per room.

“Obviously, restaurants would have liked to have seen their unemployment rates reduced so the effect of COVID didn’t really effect us, since we were essentially told to layoff our staff,” said Joshua Binning, the owner of Lucha Cantina, 1641 N. Alpine Road in Edgebrook. “That said, it is nice that Representative West was able to go out there and fight on our behalf. In this case, something’s certainly better than nothing.”

Unemployment insurance rates are determined by a multi-component formula that accounts for total wages and unemployment claims, among other factors. In its most straightforward terms, businesses with more layoffs pay a higher rate.

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Restaurants around the city including The Norwegian, The Olympic Tavern, Octane and Lucha Cantina met with West months ago to stress the importance of fixing the increase they saw. Many said their rates increase by up to seven times their original rate even though they never had a layoff outside of COVID.

Binning’s rates more than doubled from 2022 to 2023 even though his restaurant had no strikes against it in the formula.

“We’re lucky here at Lucha with the square footage that we have and amount of business that we have that we’re in a good position to be able to ride out the highs and the lows of the business environment,” Binning said. “That said many of the smaller restaurants don’t have the footprint to be able to drive the sales to even combat the amount of increased taxes they were having to pay from this unemployment insurance.”

The Norwegian, for example, has run multiple fundraisers to pay down unemployment bills that amounted tens of thousands of dollars. It survived one unexpected $85,000 bill, only to be hit with more five-figure expenses months later.

“While for us (the increased rates) hurt, for some of these places they are terminal,” Binning said.

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Crystal Douglas, the owner of Wired Cafe in downtown Rockford, said the unemployment rate spike was “another nail in the coffin” for restaurants already dealing with higher food and labor costs. She and other restaurant owners would have preferred the state solve the issue with increased rates, rather than supply this one-time funding.

“I’m just so sick of grants. I’m tired of all the paperwork,” Douglas said. “I just didn’t have a good experience with the grants through the COVID time.

“That being said, I don’t want to minimize what Maurice has done. I do appreciate him going to bat for us. I think we all do.”

Restaurant owners, including Emily Hurd of The Norwegian, had felt like they were being punished with higher rates for following the state-mandate shutdowns.

“That doesn’t sit well with me at all,” West said. “Hopefully, this will give Emily some peace of mind knowing there’s someone here from the state listening to her and attempting to help.”

This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on Twitter at @KevinMHaas.