The notion that Connecticut is “open for business” has fallen flat, particularly when you consider that 73,000 companies will soon receive bills totaling more than $30 million to cover interest on the $800 million the state borrowed from the federal government to cover the cost of unemployment checks to laid off workers. First, let’s take a step back. The unemployment fund went broke in October 2009 at the height of the recession. More than 110,000 people lost their jobs during the economic crisis, and that wiped out the unemployment fund that companies pay into. Now, companies across Connecticut will have to pick up the slack—yet another bill on top of the various fees, surcharges and taxes imposed by the legislature.
Of course, it did not have to be this way.
A little more than a year ago, after the fund went broke, Republicans asked majority Democrat leaders to join a bipartisan effort to ease the burden business owners would eventually face. The request went unanswered. During the last legislative session, Republican lawmakers introduced a bill (H.B. 5915) to come up with plans to deal with the issue of paying back the federal government. Majority legislators blocked it.
One potential remedy to alleviate the burden was to dip into the budget surplus.
Instead, companies that have already paid into the unemployment fund will get stuck with another bill. According to the Department of Labor, on average the interest costs will amount to roughly $25.50 per worker for every employer. Additional assessments will be applied in each of the next two years.
Still, there is no clear plan on how the principal loans will be repaid.
This news comes at a time when business owners and residents try to figure out how their budgets will be affected by the retroactive tax grab that began this week.
It is no wonder that Connecticut has ranked so poorly nationally in job growth going back over the last two decades. The unemployment rate has remained steady at a whopping 9.2 percent for the last four months, slightly ahead of the national average.
There is no doubt that the higher costs of doing business in Connecticut will discourage employers from growing their business and expanding the workforce. How does that translate into being “open for business?”