(WTNH) — There is a deal on the table at the state capitol to pay off the state’s unemployment trust fund debt. That’s the pot of money used to pay unemployment for those out of work.
Negotiations over the last several days between Republicans, Democrats, and the governor have resulted in a historic agreement. The changes to the structure of unemployment have been decades in the making. The governor and a bipartisan team unveiled the deal Tuesday.
Governor Ned Lamont said this deal ensures the state’s economic future. “I want to make sure you have the confidence to know your unemployment check is going to be there and we’re keeping an eye on you.”
Benefits would be reigned in. Some businesses would pay more taxes starting in 2024 because they layoff the most workers. The unemployment trust is funded by businesses through a tax.
The State Department of Labor Commissioner Kurt Westby said COVID-19 taxed the system. “The pandemic caused an abrupt loss of jobs one day people were at work and the next day businesses were completely shuttered.”
The trust fund has historically run in deficit. It currently only has a balance of $3.8 million.
Changes include; raising the taxable wage base from $15,000 TO $25,000, to qualify for unemployment an employee must earn a minimum $1,600 a year. That’s an increase from the old marker which was $600. There is also a benefit cap.
Officials are hoping that businesses will consider a state program called the “Shared Work Program” when they reach the cap. The program allows employers to pay half the payroll and decrease hours while the state picks up the other half.
It’s an option to avoid layoffs which push unemployment funds to the brink.
State Representative Sean Scanlon, the Democratic Co-Chair of the Finance Revenue and Bonding Committee says this deal will help a majority of businesses around the state. “73 percent of the businesses in Connecticut we believe will get a tax cut because of the changes we’re making to make sure the fund is solvent.”
Despite the state not kicking in any taxpayer money to pay off the debt, the agreement was praised by labor leaders and the business industry.
The President of the Connecticut Business and Industry Association, Chris DiPentima says, “It brings predictability stability to a very broken fund.”
David Roche who represents the AFL-CIO and the Construction Trades got emotional during a press conference to announce the deal. “I understand what it’s like to collect unemployment and understand how important it is it’s a lifeline sometimes.”
The state borrowed $712 million from the federal government to keep up with the demand for unemployment. At the high point, benefits were being paid to more than 390,000 filers a week. The bipartisan deal also includes another change, workers have to use all their severance pay first then apply for unemployment. Many workers used to double-dip. This change is expected to save the fund $15 million.
State Representative Holly Cheeseman Republican from East Lyme and ranking member of the finance revenue bonding committee says, “When times are tough that the fund is there to ensure our people have what they need to weather the storm.”
State representative Vin Candelora Republican Minority Leader of the House added, “At times like these compromise is very important.”
The legislature still has to approve the deal.