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Bipartisan Proposal Looks to Restore Connecticut Unemployment Trust Fund While Reducing Business Taxes

  • Governor Ned Lamont announces plan to rebuild Connecticut’s Unemployment Trust Fund that wins the backing of labor and business groups
  • Proposal will reportedly reduce taxes on 73 percent of state businesses
  • Deal includes a broadening of taxable wage base, reduced unemployment taxes, benefits reform, and recession-related measures

Summary by Dirk Langeveld

Governor Ned Lamont, along with a bipartisan group of legislative leaders and members from both labor and business groups, has announced a plan to restore Connecticut’s Unemployment Insurance Trust Fund. The proposal will also reportedly reduce taxes on 73 percent of the state’s businesses.

Connecticut has borrowed $712 million to date from the federal government to pay unemployment benefits after widespread layoffs spurred by the COVID-19 pandemic depleted the fund. However, Lamont said the fund has been struggling for decades before this crisis, with insolvency forcing the state to borrow money for 48 of the past 50 years.

The plan, which needs to be approved by the Connecticut legislature and would begin in 2024, would broaden the taxable wage base from the first $15,000 paid to employees to the first $25,000 before indexing to inflation. Solvency and experience taxes would also be reduced, while several curtailments would be made to benefits including an increase in the base period earnings required to qualify for benefits from $600 to $1,600, delaying four increases to the weekly benefit, and delaying eligibility until all severance has been paid.

The proposal also introduces several measures to assist businesses during recessions or economic shocks, including reductions in the solvency or experience tax rate during such crises and not charging employers during and immediately after recessions for benefits paid through the Connecticut Department of Labor’s Shared Work program.

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