State Rep. Kathy Kennedy (R-119) joined leaders of Connecticut’s business community April 7 in calling on the state to use incoming federal pandemic aid to shield employers from as much as $1 billion in looming unemployment taxes.
“This pandemic has hit small business and mom-and-pop shops the hardest, and these businesses can ill-afford to take on another financial hit. The state has been given federal dollars and we should do our best to help these job creators. The last thing we need as a state is more business closures and job losses,” said Kennedy, a member of the legislature’s budget-writing Appropriations Committee.
A coalition of three major business groups – the Connecticut Business and Industry Association, the National Federation of Independent Businesses and the Connecticut Restaurant Association – issued a statement Wednesday calling for action from the governor and legislative leaders to address looming unemployment taxes on the state’s small businesses.
At the peak of the pandemic, the state was paying out weekly unemployment benefits to over 390,000 filers, more than three times the total jobs lost during the 2008 recession. The burden on the state’s unemployment trust fund forced Connecticut to borrow as much as $700 million from the federal unemployment lending facility and, with the principal and interest of those loans coming due, business leaders say employers could soon be met with tax increases and special assessments as the state seeks to repay its debt.
Kennedy said that she supports a House Republican proposal to direct one-time aid from the American Rescue Plan Act towards addressing the unemployment debt crisis, which she said would hasten the state’s job recovery.
According to the CBIA, 24 other states have used federal dollars to make benefit payments or pay down unemployment debt. Connecticut is slated to receive $2.6 billion in direct federal aid.