July 15, 2024

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Business leaders seek bailout of jobless trust fund | Coronavirus

Statehouse Reporter

BOSTON — Business leaders are calling on lawmakers to support Gov. Charlie Baker’s plan to reduce a massive shortfall in the state’s unemployment trust fund.

In a letter, a coalition of business leaders urged approval of Baker’s plan to spend $1 billion as part of a supplemental budget to whittle down a deficit in the Unemployment Insurance Trust Fund.

A deficit has ballooned amid a crush of pandemic-fueled layoffs and business closures.

The business leaders, who include representatives of the North Shore and Merrimack Valley chambers of commerce, said employers should not “unfairly” be left to shoulder the entire burden of reducing the $7 billion deficit.

“These COVID layoffs were not the fault of employers or employees, but rather a direct result of state-mandated policies where employers had no choice but to reduce their workforce while their operations were suspended,” they wrote. “Despite the negative financial impact, businesses and their workers played their part to help stop the spread of the virus.”

The business leaders also suggested that lawmakers tap into a portion of $5.3 billion in federal pandemic relief funds received by the state as part of the American Rescue Plan Act to bring down the deficit.

Lawmakers have been holding public hearings, including this week, as they consider how to spend the relief money.

“Congress makes it abundantly clear that states are permitted to use the federal aid for battered (unemployment) trust funds,” business leaders wrote. “More than 30 states either used, or committed to use, CARES or ARPA dollars for (unemployment insurance) relief.”

Massachusetts paid out an unprecedented $6 billion in jobless benefits last year as hundreds of thousands of workers were sidelined by government-imposed shutdowns meant to stop the spread of COVID-19.

Baker’s administration has been forced to borrow more than $2.2 billion from the federal government to continue paying claims during the pandemic.

Red ink in the state’s trust fund is driving up insurance rates paid by employers. Legislation signed by Baker in April was supposed to ease the impact on businesses, but many have still been saddled with higher rates.

Managers of the state trust fund currently plan to spread the cost of replenishing the fund over the next 20 years.

The state’s unemployment rate, which at 16.4% last spring was among the highest in the country, dropped to 4.9% in July, according to state data.

Business leaders are also hoping a new state commission looking at ways to reduce the trust fund deficit will consider overhauling benefits paid out by the system, which are among the most generous in the nation.

Several federal jobless programs, such as the Pandemic Unemployment Assistance program and a $300 per week enhanced benefit, ended last week.

State labor officials say more than 300,000 Massachusetts residents stand to lose benefits as the programs expire.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at [email protected]

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