Conn. Demands Unemployment Payments from Businesses

By | July 27, 2011

Tens of thousands of businesses in Connecticut are receiving bills from the state to pay $30 million in interest this year for state borrowing from the federal government for unemployment insurance benefits.

About 73,000 employers have been assessed $1.70 per $1,000 of taxable payroll, or up to $25.50 for each employee, the Department of Labor said.

Because of the recession, the number of Connecticut workers filing for unemployment insurance benefits has increased significantly. The state issues about 120,000 unemployment payments totaling more than $36 million each week.

The rate of unemployment has been stuck at 9.1 percent for four months straight. Connecticut lost 4,100 jobs in June and 5,500 jobs in May, wiping out employment gains made earlier in the year.

Republican Sen. John Kissel criticized lawmakers for failing to enact legislation and instead leaving it to the Department of Labor to impose fees on businesses through an administrative rule.

“The legislature didn’t want to vote on anything it didn’t have to vote on,” he said.

But Sen. Edith Prague, co-chairwoman of the Labor and Public Employees Committee, said the Senate approved legislation changing how the unemployment compensation fund tax rate would be calculated. The legislative session expired June 8, before the House of Representatives took up the bill, she said.

Carl Guzzardi, the Department of Labor’s unemployment insurance tax director, said the assessment will remain in effect for four years as the state repays an estimated $130 million in interest. The state has borrowed money on a “fairly consistent basis” since October 2009, he said.

The principal amount is $810 million.

Many states are in a similar position, struggling to get out from under unemployment compensation debt after borrowing money from Washington. About 30 states representing 80 percent of the U.S. population, have loans outstanding, Guzzardi said.

Connecticut last found itself in debt for unemployment insurance compensation totaling about $1 billion during the recession of the early 1990s, he said.

Prague said state officials had few choices to assessing the fee as businesses are already struggling with a weak economic recovery.

“It’s a rotten time,” she said. “There’s nothing we can do about this. It has to be paid back.”

Was this article valuable?

Here are more articles you may enjoy.