Connecticut businesses could owe up to $ 1 billion in unemployment taxes. They want the state to cover it with federal relief funds.
Connecticut businesses on Wednesday called on the General Assembly and Governor Ned Lamont to use federal coronavirus relief funds to save businesses up to $ 1 billion in unemployment taxes.
The Connecticut Business and Industry Association, which heads the coalition, also said that failure to follow this approach during the last recession was a critical mistake that still haunts the state.
“It certainly hurt our recovery,” in 2008 and 2009, Chris DiPentima, president and CEO of the CBIA, said in a press conference that was broadcast live late in the morning.
And if Connecticut companies remain responsible for paying off the $ 1 billion in debt the state expects from its unemployment trust fund, he added, “it will threaten the nation again. resumption of employment. “
Connecticut, like almost every state, has racked up hundreds of millions of dollars in debt to maintain unemployment benefits since the pandemic began in early March 2020.
The State Department of Labor has borrowed about $ 700 million from the Federal Unemployment Trust to date, and projections indicate Connecticut’s debt could exceed $ 1 billion before the majority of its population is vaccinated. .
The state paid weekly benefits to more than 390,000 filers during the worst of the pandemic last spring, and the weekly filing count still stands at over 200,000. By comparison, Connecticut has lost about 120,000 jobs in the country. during the last recession, which spanned from December 2007 to mid-2009.
To ease the burden on states, the federal government waived interest charges on loans to support unemployment trusts.
Yet Connecticut is fueling its unemployment confidence with corporate taxes, and business leaders have said the state’s economy simply cannot recover if businesses remain forced to cover around $ 1. billion dollars in debt.
Kathy Saint, president and CEO of Schwerdtle, Inc., a Bridgeport manufacturing company, said her company paid more than $ 40,000 in special contributions to the state unemployment trust after the last recession – dollars that were needed elsewhere.
“It’s a machine we needed. It’s a different person, ”Saint said. “Every penny mattered, and we did without it in so many ways.”
Wendy Traub, chief financial officer of Torrington-based Hemlock Directional Boring, Inc., said all of her company’s ongoing projects were canceled or put on hold when the coronavirus hit last spring.
And while a federal payroll protection program loan helped his business retain workers, the business still spent almost eight months generating very little revenue.
Scott Dolch, executive director of the Connecticut Restaurant Association, added that about 600 restaurants here have closed over the past year and hundreds more have closed temporarily at times during the pandemic.
If Connecticut were to devote some of its resources to covering unemployment trust debt, Traub added, it would send the right message to business – “that economic recovery works when the state supports job creators.” “.
The American Rescue Plan Act of 2021, signed by President Joe Biden in early March, will send more than $ 6 billion to state, municipal and regional governments, school districts and other groups. And that doesn’t include billions of additional dollars that go directly to households in the form of stimulus payments, new and expanded tax credits, and improved unemployment benefits.
The direct share of the state government is $ 2.6 billion, and Lamont and the General Assembly should spend most or all of that to help balance the next two-year state budget. This almost matches the $ 2.5 billion deficit forecast for the next biennium, unless adjustments are made.
But state officials have other options. Connecticut has a record $ 3 billion in its rainy day fund, and analysts say the current fiscal year budget is on track to end with about $ 800 million remaining.
Lamont Director of Communications Max Reiss said “A strong, sustainably funded unemployment insurance system is Connecticut’s most important tool to keep our families out of poverty and our economy on the move.” , but he neither approved nor rejected the rescue request.
Reiss added that the administration and lawmakers are working with stakeholders “on a bipartisan path towards a healthier and more equitable way of funding this system in the long term.” The administration continues to examine several options. “
But two legislative leaders who spoke at the event showed there was some support among both sides for a state bailout of the unemployment trust.
House Minority Leader Vincent J. Candelora, of R-North Branford, said some underestimate the economic carnage the pandemic has caused because improved federal unemployment benefits have kept many households afloat .
“I think it’s… paints a different picture than what it really looks like [like] over there, ”he said,“ and businesses have certainly been affected. “
Representative Kerry Wood, D-Rocky Hill, a commercial real estate agent, said hundreds of businesses in the New York metro area are exploring buying a property in Connecticut, where COVID infection rates -19 were generally lower than the national average.
“I think Connecticut is really on the cusp of a boom,” she said, adding that state aid to the unemployment trust could be of great help. “I believe the time has come to build on that momentum and put our state’s businesses first.”