Baker plugs unemployment rate relief for small biz
With tax collections continuing to exceed expectations, Gov. Charlie Baker on Wednesday pushed lawmakers to act on his plan to use part of the surplus from last year to deliver unemployment insurance relief to small businesses.
Baker in August filed a nearly $1.6 billion spending bill that would direct $1 billion of a roughly $5 billion surplus toward the trust fund used to pay unemployment claims.
Due to the effects of the COVID-19 pandemic on the economy, the state earlier this year borrowed $7 billion to help small businesses avoid steep increase in the unemployment insurance taxes they pay to cover benefits, but that would still need to be repaid over time.
“Thanks to a strong recovery and smart budgeting, MA has a surplus – it’s time for lawmakers to return those surplus tax dollars and pass our plan to deliver small business relief,” Baker tweeted.
The surplus Baker has proposed to spend on small business relief was from fiscal year 2021, which ended on June 30, but tax revenues have continued to come in strong in fiscal year 2022 and beat projections by $500 million in September.
Beacon Hill Democrats have not said whether they intend to use some of the surplus to reduce the unemployment insurance liability for small businesses, or if they might tap into the nearly $5 billion in American Rescue Plan Act funds to reduce the size of the tab facing employers over the next 20 years.
Some business groups, including Associated Industries of Massachusetts, have urged the Legislature to use both sources of funding for UI.
On the day of the Legislature’s final ARPA hearing Tuesday, the state chapter of the National Federation of Independent Business said it was “unfair” to demand that employers pay back the full $7 billion deficit that resulted from pandemic layoffs, urging lawmakers to follow the lead of more than 30 other states that have used some ARPA funds to replenish their UI systems.