Small Businesses Call on State to Use Federal Relief Funds to Tackle Unemployment-Related Debt Crisis |
Executives and small business organizations today called on policymakers to use federal COVID-19 relief funds to address an unemployment debt crisis that threatens the state’s economic recovery.
CBIA, NFIB Connecticut, the Connecticut Restaurant Association, the Connecticut Food Association, and the Grand New Haven Chamber of Commerce urged the Lamont administration and the legislature to act quickly to address the problem.
The leaders of these organizations spoke at a press conference with three heads of small businesses—Wendy traub, chief financial officer of Hemlock Directional Boring, based in Torrington; Kathy saint, president and CEO of Schwerdtle, Inc. in Bridgeport; and partner of Max Restaurant Group Scott Smith.
They were joined by the Republican House leader Vincent candelora (R-North Branford) and State Rep. Kerry Wood (D-Rocky Hill), who co-chairs the Legislative Assembly’s Insurance and Real Estate Committee and the Moderate Democratic Blue Dogs Caucus.
President and CEO of the ABCA Chris DiPentima said employers are solely responsible for repaying the $ 700 million – plus interest – the state borrowed from the federal government to pay unemployment benefits related to the pandemic.
The total amount of these loans – made necessary after the insolvency of the state unemployment compensation trust fund – will likely exceed $ 1 billion.
DiPentima noted that 24 states use federal coronavirus relief funds either to help meet unemployment benefit obligations or to repay the principal of their federal loans.
“This is a looming crisis and in the absence of federal relief dollars, Connecticut businesses will be paying off this debt for many years – threatening the state’s job recovery and economic recovery,” DiPentima said. .
“We cannot afford what happened after the 2008-2010 recession, with Connecticut employers paying four times unemployment taxes of those in neighboring states, financial pressure that prolonged the economic downturn and undermined the recovery in employment and economic growth. ”
Connecticut has recovered only 58% of the 292,400 jobs lost in March and April to closures and restrictions related to COVID. The state’s unemployment rate is 8.5%, the highest in New England and well above the US rate of 6.2%.
Andrew Markowski, State Director of NFIB in Connecticut, warned that another round of tax hikes and special assessments would have a devastating impact on ailing small businesses in the state.
“The COVID-19 pandemic has hit small businesses harder than large ones, and although a recovery here in Connecticut has slowly started, it is patchy and fragile,” Markowski said.
“Without a significant injection of cash, small business owners will face devastating tax hikes, special assessments and surtaxes as they were after 2009.
“By committing federal money to our state’s unemployment trust fund, lawmakers can avoid imposing higher costs on job creators when they can least afford it.
Executive Director of the Connecticut Restaurant Association Scott Dolch said Connecticut was one of the last states to repay its federal loans after the 2008-2010 recession, with employers burdened with six years of higher taxes and special assessments.
“Connecticut’s restaurant industry was among the earliest and most directly affected sectors of our economy when COVID hit, and what restaurants need more than ever is stability and predictability,” did he declare.
“Sadly, the looming problem with our state’s unemployment trust fund is a crisis that will produce the exact opposite.
“Our industry is made up almost entirely of small businesses, and their owners remember what happened after the Great Recession when they had to foot the bill for the loans associated with this fund.
“It can’t happen again – Connecticut needs to solve this problem using available federal funds, not asking more of struggling businesses like ours.”
Representative Candelora said he hopes today’s press conference will highlight the issue and generate greater bipartisan momentum for the use of federal funds, adding that lawmakers must support job creators. government, especially small businesses.
“As a growing sense of hope over the vaccine signals a return to normalcy, members of the General Assembly cannot lose sight of the fact that the pandemic has pushed many Connecticut businesses to the brink. – and, unfortunately, some beyond, “he said.
“The legislator must, of course, do everything in its power to support the job creators of our State in their recovery. Focusing on the Unemployment Trust Fund seems a logical place to start not only because there is bipartisan interest, but because history tells us that the multi-year burden that the business world would face would be. faced to pay off the state’s accumulated unemployment debt could slow our economic recovery to a higher level. uncomfortable crawl.
“I urge the Governor and all of my colleagues in the Legislature to address this issue today to alleviate some of the pressures businesses will face in the future.
Representative Wood said the state needs to prioritize job recovery and economic growth and embrace the practices of other states that are using federal COVID relief funds to ease the burden on businesses.
“Our pandemic recovery should be about investing in our economy and doing everything possible to encourage growth,” she said.
“This includes using US dollars from the bailout to help businesses in our state take out unemployment debt.”
CBIA is Connecticut’s largest trade organization, with thousands of member companies large and small, representing a wide range of industries from all parts of the state. For more information, please contact Joe Budd (860.244.1951).