Governor Ned Lamont announced a bipartisan agreement to restore the Unemployment Insurance Trust Fund and reduce taxes on a majority of Connecticut businesses on Tuesday.
According to Lamont, the Unemployment Insurance Trust Fund has been underwater and bankrupt for 48 out of the last 50 years and that forced the state to borrow money from the federal government during economic downturns.
State officials said during the Great Recession, the state borrowed $1.25 billion from Washington, which was a debt that was repaid with $85 million in interest over the next years. During this current recession, Connecticut has borrowed $712 million and counting, which is another debt it will repay with interest as the economy starts to recover, they added.
The proposal Lamont announced restores trust fund solvency and reduces taxes on at least 73% of businesses by broadening the taxable wage base, reducing tax rates and reforming benefits, according to Lamont's office.
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State Rep. Sean Scanlon, who is part of the House Revenue Committee said the state is making sure the Unemployment Insurance Trust Fund is solid for the first time in a very long time.
The state is going to lower the responsibility and burden on a vast majority of businesses in the state when it comes to unemployment taxes, Scanlon said.
State officials said starting in 2024, the proposal does multiple things including:
- Increasing taxable wage base from $15,000 to $25,000 then indexes to inflation
- Reduces maximum solvency tax rate from 1.4% to 1%
- Reduces the minimum and expands the maximum experience tax rate from 0.5-5.4% to 0.1-10%
- Increases the minimum base period earnings required to qualify for unemployment benefits from $600 to $1,600 and then indexes it to inflation (except when the federal government is providing additional benefits to UI claimants)
- Delays four annual $18 increases in the maximum weekly benefit amount
- Defers UI benefits until the end of any severance payments for all employees
“A robust, sustainably funded unemployment insurance system is Connecticut’s most important tool for keeping our families out of poverty and our economy in motion during a recession,” Lamont said in part in a statement.
March 2021 unemployment data showed Connecticut’s unemployment rate at 8.3 percent, down from 8.5 percent in February.
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