The state Senate early this morning approved a bipartisan agreement to restore Connecticut’s long-troubled Unemployment Insurance Trust Fund, and Gov. Ned Lamont, who played a role in brokering the original deal in the House of Representatives, says he will sign it into law.
The measure cleared the Senate 34-0, according to the General Assembly’s bill tracking website. It received the House’s stamp of approval in early May.
“This package of reforms that I will soon sign into law is the most significant set of reforms ever enacted in the history of Connecticut’s unemployment system,” Lamont said in a statement this morning. “With this legislation, we are reinforcing the long-term solvency of the state’s unemployment insurance fund, ensuring that it will be there for those who need this assistance in the future while also providing predictability for our state’s employers when it comes to their contributions.”
Connecticut’s unemployment fund has been insolvent for 48 of the last 50 years, meaning that when a major economic crisis causes joblessness to surge, the state has had to borrow money from the federal government and pay it back with interest.
As of mid-May, for instance, Connecticut had borrowed just over $700 million to fund unemployment benefits for those thrown out of work by the COVID-19 pandemic, and it is possible that figure could reach $1 billion before the state’s unemployment rate returns to something resembling pre-pandemic normalcy.
The reform package, known as HB 6633, aims to end the fund’s dependence on federal dollars and the interest payments that come with them by broadening the taxable wage base and reducing and restructuring some benefits.
Starting in 2024, the legislation would increase the taxable wage base from $15,000 to $25,000, and then tie that figure to inflation. Minimum base period earnings required to qualify for unemployment insurance would be raised from $600 to $1,600 and then indexed to inflation, except for when the federal government steps in to provide additional benefits to claimants.
HB 6633 also delays four annual $18 increases in the maximum weekly benefit amount and
defers unemployment insurance benefits until the end of any severance payments for all employees.
Those changes are expected to reduce taxes on at least 73% of businesses.
State officials have said that if Connecticut had implemented the proposed reforms after the last recession, it would have entered the pandemic with a solvent trust fund.
The agreement has been backed by Democrats, Republicans, officials with the Connecticut AFL-CIO and business groups such as the Connecticut Business & Industry Association.
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