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April 12, 2022

CBIA, trade groups urge use of federal funds to cover unemployment debt

CBIA CEO Chris DiPentima.

Industry associations and small business groups are calling on state officials to steer 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 such as the Connecticut Restaurant Association, Connecticut Food Association and Connecticut Retail Merchants Association, the petitioners said the burden of the state’s unemployment debt — which rose dramatically as residents were thrown out of work by the COVID-19 pandemic in 2020 — should not placed back on business owners and operators.

“It took six years of higher unemployment taxes on employers to pay off federal loans following the 2008-2010 recession and we can’t hold that debt over small businesses again,” said CBIA President and CEO Chris DiPentima. “State and federal unemployment taxes will jump 22% by 2026, money better invested by employers in addressing the labor force crisis, the biggest threat to Connecticut’s economic recovery.”

According to the CBIA, the state borrowed $888 million from the federal government to cover pandemic-driven unemployment compensation benefit claims after the state 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 responsible for the remaining $463 million loan balance, CBIA said, and face four years of tax hikes, starting later this year, to cover those repayments.

CBIA and state trade groups have called for months to shift the burden of unemployment debt off of businesses, arguing higher taxes will only compound the problems employers are already facing, including inflation, supply chain issues and a continuing labor shortage. Those challenges have been particularly acute for brick-and-mortar retailers, which struggled to stay afloat even before the disruption of the pandemic, and restaurants, which saw revenues dry up as customers avoided traditional indoor dining for months.

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