LITTLE ROCK — Arkansas’ recession-era unemployment debt to the federal government, at one time as high as $360 million, will be paid off by Jan. 1, Gov. Mike Beebe said Friday.

LITTLE ROCK — Arkansas’ recession-era unemployment debt to the federal government, at one time as high as $360 million, will be paid off by Jan. 1, Gov. Mike Beebe said Friday.

The debt was created when the state began taking advances from the federal government after an increased demand for unemployment benefits during the recent recession depleted the state Unemployment Insurance Trust Fund. Arkansas was one of 35 states to take the advances.

By April 2011, the state’s debt had reached $360 million. Beebe received authorization from the Legislature to issue bonds to pay off the debt if necessary, but he chose not to do so after management and labor groups reached a compromise.

"The balance owed by Arkansas has gone from nearly $360 million to below $3 million. And by year’s end, it will be zero," Beebe said Friday in his weekly column and radio address.

Under the compromise, companies had to pay more into the Unemployment Insurance Trust Fund for each employee through a reduction in tax credits. Recipients of unemployment benefits saw stricter eligibility requirements and a shortened time span for collecting benefits.

Beebe said those concessions, combined with a recovering economy, have made it possible to pay off the debt this year and allowed the state to avoid the servicing fees that would have accompanied a bond issue. The trust fund is holding steady now at $200 million, which the state can use in the even of a future economic downturn, he said.

"This is just one more example of responsible economic policy in Arkansas," Beebe said. "Eight states are still authorized to receive UI advances this month, and 11 other states have outstanding balances totaling nearly $14 billion, more than half of that in California alone."

He said Arkansas still has work to do to find jobs for its people, but the state is on a much more stable financial footing than it was five years ago.

"Both this experience with unemployment insurance and our ability to balance budgets without severe spending cuts show that Arkansans, when tested by the fire of crisis, can still work together to find the solutions that best serve our people." he said.