Charlie Baker lobbies for supplemental $1.6B budget to fund unemployment insurance in Massachusetts

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Massachusetts Gov. Charlie Baker filed a $1.57 billion supplemental budget proposal Wednesday that aims to aid small businesses as the state’s economy continues to recover from the COVID-19 pandemic.

The bill would utilize $1 billion to replenish the Unemployment Insurance Trust Fund and provide resources for Massachusetts charities and nonprofit organizations while ensuring small businesses won’t have to bear any tax burden for any assistance received from pandemic relief initiatives.

“Thanks to careful management of the Commonwealth’s tax revenues and strong economic activity, Massachusetts has an unprecedented surplus at the close of Fiscal Year 2021, and this legislation ensures those resources are put to work to support local economies and small businesses,” Baker said in a news release announcing the initiative. “Our proposal to provide employers with unemployment insurance relief is fiscally responsible and would provide much-needed support for businesses and workers across the Commonwealth.”

Christopher Carlozzi, state director for the National Federation of Independent Businesses, said he was pleased to see the governor initiate action on helping replenish the Unemployment Insurance trust fund.

“Small businesses, forced to shut their doors and operate under heavy restrictions following state orders, should not be held solely responsible for replenishing the depleted Unemployment Insurance trust fund,” Carlozzi said in a news release. “The pandemic-related layoffs were not the fault of Massachusetts employers and there must be a shared responsibility from the state to deal with the looming unemployment insurance crisis. Today’s announcement by Governor Baker to allocate $1 Billion for the UI Trust Fund will help provide some relief for struggling small businesses.”

Carlozzi said the COVID-19 pandemic exhausted the trust fund in July 2020 as businesses were forced to close to prevent the spread of the virus.

“We were officially out of money and began borrowing,” Carlozzi told The Center Square. “At the beginning of this year, some actions were taken to prevent rate spikes for small businesses. In Massachusetts, we have the highest UI taxes in the nation. We are ranked one of the worst, but employers pay for very generous benefits.”

Carlozzi said the Legislature initiated a rate freeze at the beginning of 2021 so “there were no tax hikes to a program that currently features a $7 billion deficit that is amortized over a 20-year period.”

“Employers will still face the deficit over 20 years, and the businesses did not ask to be shut down,” Carlozzi said. “Massachusetts had a restrictive shutdown and businesses were closed for more than a year. We felt the need for some shared responsibility by the state.”

In the governor’s letter to the Legislature, Baker detailed how COVID-19 wreaked havoc on the economy but said the proposed bill would “reduce the need to borrow funds for COVID-era claims, and thereby reduce the need for future employer assessments.”

“The (billion dollars) is a good step,” Carlozzi said. “That billion is from surplus revenues. The state of Massachusetts had revenues well above the benchmark. The money is coming from actual (state) revenue and not [federal] ARPA funds, which are still sitting there to be spent.”

The NFIB sent a letter to legislative leaders Wednesday urging them to support Gov. Baker’s supplemental budget “to help replenish the beleaguered Unemployment Insurance Trust Fund, while leaving open the potential for additional financial relief through the American Rescue Plan aid.”

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