State Sen. Edith Prague on Thursday raised the possibility of the state picking up the tab for employers to pay off the federal funds Connecticut is borrowing to pay jobless benefits.
Prague aired the idea during an informational session at the Legislative Office Building in Hartford, saying the move would help businesses by preventing a tax increase while ensuring the state’s unemployed residents keep getting benefits.
“I’m hoping that will happen,” said Prague, a Democrat from Columbia, who is co-chair of Labor & Public Employees committee.
When Prague asked Department of Labor Deputy Commissioner Dennis Murphy if such a plan had been discussed, he said it had not.
With the state facing a $3.6 billion budget deficit, it’s not clear if such funding would be available.
Malloy Administration officials did not immediately respond to a request for comment.
Connecticut’s unemployment insurance trust fund, which is funded solely by employers, became insolvent in October 2009, which has forced the state, so far, to borrow $580 million from the federal government to pay jobless benefits. But that amount will likely grow to over $1 billion as Connecticut’s economic recovery continues to languish.
Beginning Aug. 1, the state will start charging businesses a special assessment to cover interest payments on those borrowed funds.
The total special assessment will be about $40 million, equating to an average cost of about $40 per employee, said Carl Guzzardi, tax director for the state Department of Labor.
The special assessment will be charged annually to employers until the state repays what could be more than $1 billion in funds borrowed from the federal government to help provide paychecks to jobless residents
Total interest costs are projected to be about $100 million.
