Lamont pushed to repay unemployment debt


Connecticut’s biggest business lobby is pressuring Governor Ned Lamont to use pandemic relief funds to pay off the state’s unemployment debt stemming from the large number of jobless claims during the pandemic.

At its annual business day in Hartford, which featured the governor as a keynote speaker, the head of the Connecticut Business & Industry Association said that if the state did not act, companies would be liable for money from this autumn.

“We are asking for additional funds because they are simply up to the companies,” said CBIA President and CEO Chris DiPentima. “It’s technically a tax increase — not caused by the state, caused by the pandemic, but businesses have to pay a tax to the federal government.”

Connecticut has borrowed nearly $900 million from the federal government to cover record unemployment claims during the pandemic. About half the money was repaid with $300 million from employers and the state using COVID relief funds to cover $125 million.

Employers are responsible for the remaining $463 million, which the CFIA says will result in four years of tax hikes. The average federal and state unemployment tax cost to businesses per employee is $542, according to the AABC. This would rise to $563 in 2023; $584 in 2024; $605 in 2025 and $661 in 2026.

“For me, it’s all about prioritization,” David Lehman, the State Department’s commissioner of economic and community development, said at Tuesday’s event.

Lehman said the best “value for money” for the state is to keep paying down its pension debt, which is a very high cost of capital, versus unemployment debt, which “is lower-cost debt. cost and it happens later in the future.”

“If you can pay off the high cost of capital debt, you’d rather do it and do it quickly,” he said. “Pensions have long been a big burden on the state and we need to get out of this albatross.”

Lamont, who attended the AABC event virtually, made a similar point during an online press conference later Tuesday, saying the interest rate was much lower to pay off unemployment debt. . But the governor, who is offering $336 million in tax relief, said he was open to proposals to address the insolvency of the unemployment fund.

“Obviously everything is a choice,” said Lamont, who this week began budget negotiations with lawmakers. “You know how important labor is and how affordable housing is. Do I take money there to pay unemployment? Maybe you pay a little less back to the pension fund and then use a little more for the unemployment fund.

But DiPentima said Tuesday at an afternoon news conference with legislative Republicans that unemployment debt falls squarely on the shoulders of business owners across the state as pension debt affects all Connecticut taxpayers. The added burden for employers would come after two years of pandemic disruption and now decades-high inflation, he said.

Keith Beaulieu, president of the Connecticut Restaurant Association and owner of the Main Pub in Manchester, told the press conference that the added cost of paying off unemployment debt to businesses like his would be detrimental.

“In the next year alone, my sole proprietorship with 38 employees would be looking at a $20,000 raise,” Beaulieu said.

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