- CBIA leading coalition calling for Connecticut to pay down unemployment debt with federal relief funds
- Businesses argue that requiring businesses to cover this debt will stall post-pandemic growth
- Connecticut is set to receive $2.6 billion under the American Rescue Plan
Summary by Dirk Langeveld
Connecticut businesses are looking to federal funds the state will receive under the American Rescue Plan to offset unemployment debt, a step which would relieve companies from covering this debt.
The state’s Department of Labor has borrowed approximately $700 million from the federal unemployment trust to cover benefits during the surge in joblessness brought on by the COVID-19 pandemic. The Connecticut Business & Industry Association, which is leading a coalition calling for federal funds to cover this debt, said it anticipates Connecticut may borrow more than $1 billion before vaccines are widespread enough to stabilize the state’s economy.
CBIA argues that Connecticut previously required businesses to cover unemployment debt after the Great Recession, and that this made the state less competitive and stalled growth. Some business leaders have said that higher unemployment taxes will limit their ability to hire workers, make capital improvements, or otherwise take steps that can favor the state’s economy. CBIA says that 24 other states have dedicated some of their share of American Rescue Plan funds to covering unemployment debt.
Connecticut’s state government is slated to receive $2.6 billion under the legislation. The state could also potentially use alternatives such as tapping its rainy day fund or using an anticipated budget surplus to cover the unemployment debt.