The Pew Charitable Trusts

September will bring unwelcome news for the 28 states that have borrowed a combined $36 billion from the federal government to cover unemployment benefits for their out-of-work residents. Starting next month, they must begin to pay Uncle Sam back for the enormous loans they have taken out. Their debt is likely to trickle down to businesses — which are being counted on to drive the economic recovery — in the form of higher costs.

Indiana businesses are getting a preview of what this means. In an effort to shore up their struggling unemployment fund — which has been on poor financial footing since before the Great Recession began — Indiana legislators recently raised premiums and fees on the businesses that pay into the account. The result for the private sector has been a 44 percent increase in unemployment costs so far this year, The Journal Gazette of Fort Wayne reports , and that doesn't even factor in the additional fee hikes that will become necessary next month because of Indiana's significant borrowing from the federal government. 

Indiana businesses have contributed a combined $741.6 million into the state unemployment insurance fund this year, The Journal-Gazette reports. Last year, they paid $514 million. In other words, by the time 2011 ends, Indiana businesses are likely to have paid double the premiums and fees that they paid in 2010, and the burden will only grow as the state pays interest on the $1.8 billion in unemployment money it has borrowed from the federal government since 2008.

Despite the substantial cost increases for the Indiana business community, the reaction to the state's unemployment changes has been surprisingly muted. While there has been much talk on the presidential campaign trail about "job-killing taxes" and other government actions relating to the private sector, Indiana officials are casting the changes as necessary to put the unemployment fund on a sustainable long-term path. Businesses, they argue, will come to appreciate the long-term viability of the fund, even if it means short-term pain.

"Everyone saw this coming, and people understand the need to be solvent," Mark Everson, commissioner of the Indiana Department of Workforce Development, tells The Journal Gazette . "There has been no uproar. The fact that we dealt with this issue is a plus. Stability is an important thing."