Pa. to borrow $4.5 billion to settle debt from unemployment pay

Gov. Tom Corbett has signed a law giving Pennsylvania the authority to borrow $4.5 billion.

The money will be used to pay another loan — the nearly $4 billion the state has borrowed to hand out unemployment benefits since 2009.

Sen. John Gordner, who sponsored the new act, says the bond’s low interest rate is lower than the amount Pennsylvania is already paying on the federal debt.

“Interest to the tune of around $244 million, that was spread across to every employer in the state,” Gordner, R-Columbia, said Tuesday. “If they had 10 employees a year ago, and 10 employees this year, their (unemployment compensation) bill went up because of that.”

The law also changes Pennsylvania’s unemployment compensation system. It freezes the maximum benefit per week at $573; that cap will remain in effect through 2019.

The legislation also changes eligibility. Those who earn more than 51 percent of their annual income in one quarter would no longer be eligible for benefits.

That’s down from the previous 63 percent limit.