Industry associations and small business groups are calling on state officials to direct federal pandemic relief funding to cover Connecticut’s unemployment debt as an alternative to raising taxes on employers.
In a statement released by the Connecticut Business & Industry Association and signed by organizations including the Connecticut Restaurant Association, the Connecticut Food Association and the Connecticut Retail Merchants Association, the petitioners said the state’s unemployment debt burden – which increased significantly as residents were forced out of work by the COVID-19 pandemic in 2020 – should not be returned to business owners and operators.
“After the 2008-2010 recession, it took six years of increased unemployment contributions for employers to pay off federal loans and we can no longer hold that debt on small businesses,” said Chris DiPentima, president and CEO. of the CBAA leadership. “State and federal unemployment taxes will rise 22% by 2026, money better invested by employers to deal with the labor crisis, the greatest threat to the Connecticut’s economic recovery.”
According to the CBIA, the state borrowed $888 million from the federal government to cover pandemic-related unemployment compensation claims after the state’s unemployment trust fund became insolvent.
About $425 million has been repaid, the group said, with employers paying $300 million and federal relief funds covering $125 million, in addition to $26 million in interest payments.
Employers are currently being held liable for the remaining balance of the $463 million loan, the CFIA said, and face four years of tax hikes, starting at the end of the year, to cover those repayments.
The CFIA and state trade groups have been calling for months to shift the burden of unemployment debt from businesses, arguing that higher taxes will only make problems employers already face, including inflation, worse. , supply chain issues and an ongoing labor shortage. These challenges have been particularly acute for brick-and-mortar retailers, which have struggled to stay afloat even before the pandemic disruption, and restaurants, which have seen their revenue dry up as customers shun traditional dining at the inside for months.