Officials Detail Plan To Restore CT Unemployment Insurance Fund

CONNECTICUT — Legislative leaders have announced details of a proposal meant to address the chronic insolvency of the state's Unemployment Insurance Trust Fund.

If passed, the legislation would also reduce taxes on at least 73 percent of businesses by broadening the taxable wage base, reducing tax rates, and reforming benefits.

State Rep. Sean Scanlon said he anticipates House Bill 6633 moving out of the Finance Revenue and Bonding Committee, which he chairs, before the end of the week.

Spcifically, starting in 2024, the bill calls for the increase of the taxable wage base from $15,000 to $25,000, then indexes it to inflation. It also reduces the maximum solvency tax rate from 1.4-percent to 1 percent, and reduces the minimum and expands the maximum experience tax rate, from 0.5-5.4 percent to 0.1-10 percent.

For workers, the proposal would increase the minimum base period earnings required to qualify for unemployment benefits from $600 to $1600, then index it to inflation, except when the federal government is providing additional benefits to unemployment insurance claimants. It also delays four annual $18 increases in the maximum weekly benefit amount, and defers unempployment benefits until the end of any severance payments for all employees.

The Unemployment Insurance Trust Fund is administered by the state Department of Labor, and it is the fount from which all unemployment insurance benefits flow. That fund went broke last year, following the unprecedented drain placed upon it by the coronavirus pandemic. The state government ultimately borrowed over $712 million from the federal government to pay out unemployment claims.

It was not the first time the fund went belly up. During the Great Recession of the late 2000s Connecticut borrowed $1.25 billion from Washington, a debt repaid with $85 million in interest over the next six years.

Speaking Tuesday at a news conference held at the state Department of Labor offices in Wethersfield, House Minority Leader Vincent Candelora said: "This bipartisan proposal offers a meaningful step toward creating long-term stability in our unemployment compensation fund while easing associated cost burdens for businesses."