Business groups are accusing lawmakers of turning a blind eye to the festive bankruptcy of the state’s unemployment trust fund and paying businesses with federal aid and additional tax dollars at the state’s settlement instead of paying off debt.
“There has been little talk about debt publicly by legislators and this is trying to raise awareness,” said Christopher Carlozzi of the National Federation of Independent Business.
Massachusetts’ unemployment trust fund – which is funded through a payroll tax on businesses – is sinking amid an unprecedented number of claims during the pandemic and is on track to be $4 billion in the red by the end of next year, according to the state. Is.
This spring, lawmakers moved to set aside more than $7 billion in pandemic-era claims after businesses saw their unemployment insurance tax rates more than double, but John Hurst of the Retailers Association of Massachusetts points out “They’re still getting the full tab plus $1 billion in interest amortized over 20 years.”
More than 30 states in similar situations have opted to use federal Care Act money and ARPA funds to pay off debt and take the burden off employers.
Eileen McEnany, president of the Massachusetts Taxpayers Foundation, is urging lawmakers to consider doing so.
“At the moment the burden of replenishing the fund only falls on businesses when the cost should actually arise more widely,” he said during a hearing before the Legislature on Tuesday.
Republican gubernatorial candidate Geoff Diehl, a former state representative, seized on the opportunity to call on the governor and legislature to use federal American Rescue Plan Act funds to plug the debt.
Diehl compared the conversation so far in an interview with the Herald on Thursday to “going on a shopping spree at the mall with insurance money after a car” with how to spend the remaining $5.3 billion in unrestricted money.
“Asking our Commonwealth’s distressed small businesses to pay these billions in unemployment funds will further devastate them. And it is not necessary,” Diehl said in a statement, adding that a portion of the state’s additional tax revenue should also go to repay the debt.
Massachusetts’ economy is booming despite a pandemic that has closed thousands of businesses and put tens of thousands more on unemployment rolls. According to the Department of Revenue, after an initial decline in the initial month of the pandemic, tax revenue collections have consistently fallen above the benchmark and are nearly $4 billion higher than May’s estimates.
Charlie Baker’s office declined to comment, but during testimony before the legislature on Monday about his plan to immediately allocate $2.9 billion to housing, infrastructure, health services and workforce development, the Republican governor said. Told that there was about $2 billion left in his plan.
“I appreciate the legislature’s interest in pursuing a deliberative process to distribute these funds,” Baker said.