Connecticut’s business community is opposing some changes to the state’s unemployment trust fund, which has slipped into insolvency. WNPR’s Harriet Jones reports.
Connecticut’s unemployment trust fund went broke in mid-October, as the state continues to pay out more than 45 million dollars a week in benefits. Connecticut is borrowing from the federal government to plug the gap in the system, but it must repay those loans – which could top a billion dollars – by the end of next year, or face hefty interest payments. The system is funded by a tax on employers. Officials at the Department of Labor want to see the fund allowed to hold more cash in reserve in order to meet the needs of the next recession, but the Connecticut Business and Industry Association opposes that – the CBIA’s Bonnie Stewart:
"Any money that they’re taking out of the economy by having a reserve that just sits there, means that employers have less money to invest in jobs which is something we don’t want because the best way to keep a solvent fund is to have people employed, not unemployed."
But Carl Guzzardi, tax director for the state Department of Labor says ultimately employers will have to pay for the interest on the federal loans, and it’s better to be prepared ahead of time.
"The reserve goal in and of itself does not increase employer taxes at all for the next several years, because we will not be capable of building the goal to that period until at least I believe the year 2014 or 15. So what we’re trying to do with the reserve goal is build for the future."
The department is consulting with the business community and will make recommendations for changes to the fund. Governor Jodi Rell has appealed to the state’s congressional delegation to lobby for extensions on Connecticut’s interest free federal loans.
For WNPR, I'm Harriet Jones.