Lawmakers: Use fed funds to address program sticker shock
A growing chorus of lawmakers is pushing to direct federal stimulus funding toward the state’s unemployment benefits system to soften the blow of an unexpected surge in required contributions from employers, and House Speaker Ronald Mariano wants an explanation from the Baker administration.
House Minority Leader Brad Jones and Senate Minority Leader Bruce Tarr were circulating a letter on Tuesday to Democratic leadership and Gov. Charlie Baker, urging them to use some of the billions in aid from Washington to replenish the state’s unemployment insurance trust fund.
Dipping into the pool of federal dollars, the lawmakers said, would relieve pressure on employers who were hit with much larger quarterly unemployment tax bills than they expected due to a fifteenfold increase in the solvency fund assessment rate.
“We are urging you to follow the lead of Maryland and other states by dedicating a portion of the federal COVID-19 relief aid Massachusetts is receiving through the American Rescue Plan Act or other available and relevant federal funds to replenish the Unemployment Insurance Trust Fund,” lawmakers wrote in their letter. “Doing so will remove the financial burden from employers who are already struggling to survive, which in turn will help protect jobs and contribute to a strong post-pandemic economic recovery.”
The assessment rate sticker shock surfaced after the Legislature and the Baker administration spent weeks drafting and passing a bill to ease and extend the cost impacts on businesses of unprecedented jobless claims.
In a statement to the News Service, a Mariano spokesperson said the speaker “shares his colleagues’ concerns about the significant increase in solvency fund rates.”
“He was surprised the Administration did not factor the assessment calculation and forecast the magnitude of the increase in the recent amendments proposed,” Mariano’s office said. “The Legislature has acted swiftly to address the UI system and provide relief to businesses. We are reviewing this issue and awaiting information from the Administration, including a cost estimate. We hope to have the necessary information soon.”
Baker signed legislation earlier this month designed to limit the cost increases on employers who fund the joblessness system by freezing the rate schedule, but the bill’s drafters only targeted part of the complex formula that determines those taxes.
Because of the multibillion-dollar deficit forecast for the unemployment fund for the next few years, a section of the contribution system that lawmakers did not touch known as the solvency assessment rate jumped from 0.58% in 2020 to 9.23% in 2021. That translates to thousands of dollars more in charges on many businesses. Few, if any, concerns were raised publicly about the solvency assessment during debate on the wideranging unemployment and tax relief bill that Baker — who filed an original version of the proposal late last year — signed on April 1.