Debt and unemployment crisis threaten small business recovery |
Connecticut small business leaders and organizations today called on policymakers to use federal pandemic relief funds to address the unemployment debt crisis threatening the state’s economic recovery.
CBIA, NFIB Connecticut, the Connecticut Restaurant Association, the Connecticut Food Association, the Connecticut Merchants Association, the Connecticut Lumber Merchants Association and the Greater New Haven and Quinnipiac Chambers of Commerce urged the Lamont administration and lawmakers to prevent ongoing unemployment tax hikes for employers.
Three small business owners—Wendy Traub, chairman of Torrington-based Hemlock Directional Boring; Carmen Romeo, owner of Fascia’s Chocolates in Waterbury; and Keith Beaulieu, owner of the Main Pub in Manchester and president of the Connecticut Restaurant Association – explained how these tax hikes were hurting their ability to recover from the pandemic.
They were joined by the House Republican leader Vincent Candelora (R-North Branford) and Senate Republican Leader Kevin Kelly (R-Stratford).
CBIA President and CEO Chris DiPentima noted that the state borrowed $888 million from the federal government to cover pandemic-related unemployment compensation claims after the insolvency of the unemployment trust fund.
To date, $425 million has been repaid, with employers reimbursing $300 million and federal COVID relief funds covering $125 million, plus $26 million in interest payments.
Employers are responsible for the remaining balance of the $463 million loan and face four years of tax hikes, starting this fall, to cover those repayments.
Expected unemployment tax hikes
State and federal unemployment taxes (average per employee):
- Current: $542
- 2023: $563
- 2024: $584
- 2025: $605
- 2026: $661 (22%)
Recovery of small businesses
“It took six years of increased unemployment contributions to employers to pay off federal loans after the 2008-2010 recession and we can’t hold that debt back on small businesses any longer,” he said.
“State and federal unemployment taxes will rise 22% by 2026, money better invested by employers to deal with the labor crisis, the greatest threat to the economic recovery of the Connecticut.”
NFIB Connecticut State Director Andre Markowski said that while the Legislature has recently taken positive steps to help small businesses recover from the pandemic, employers are still hurting and worried about rising costs.
“Here’s what we know: our small business owners are bearing the brunt of the unemployment debt crisis,” he said.
“That is why we are again calling on the General Assembly and the Governor to help pay off the hundreds of millions of dollars of outstanding unemployment fund debt.”
President of the Connecticut Retail Merchants Association Tim Phelan said retailers of all sizes have endured a tough two years and the threat of tax hikes is making it more difficult to continue business.
“Legislative action to ease this burden is necessary, appropriate, and necessary to better enable retailers to continue their important role in Connecticut’s economic recovery, for the benefit of their customers and communities,” he said.
Beaulieu said that with Connecticut experiencing record surpluses and lawmakers proposing new spending programs, “it’s hard to understand why lawmakers aren’t willing to help small businesses.”
“Small businesses like mine are still working to recover from the pandemic while facing new challenges like inflation, rising commodity costs and labor shortages,” he said. declared.
“Unless the unemployment debt crisis is resolved, many small businesses will continue to be at risk.”
‘Relieve the pressure
Garrett Sheehanpresident and CEO of the Greater New Haven and Quinnipiac Chambers of Commerce, said small businesses, grappling with inflation, supply chain bottlenecks and labor shortages ‘work, can not afford additional costs.
“Reimbursing the unemployment trust fund will relieve pressure on businesses at all levels and reduce uncertainty about rising taxes at a time when we should be focused on getting back to business,” he said.
Traub said Hemlock has been in business for more than 25 years, but COVID-19 and other challenges, including the threat of higher taxes, threaten to shut down his small business.
“Our company is trying to increase its workforce, but there is always a constant fear that the state may, once again, impose operating restrictions or develop new taxes or increase taxes on business owners,” she said.
“This creates uncertainty and limits our investments in new capital equipment or additional manpower. For economic recovery to succeed in Connecticut, we must be confident that the government recognizes and supports our efforts.
Candelora said so far this session, lawmakers’ efforts to address business leaders’ concerns have been insufficient or, in the case of the Labor and Public Employees Committee agenda, the opposite. of what is needed.
“We have less than a month left in the session to address perhaps the main issue, the federal unemployment debt repayment, and I implore my colleagues to come back to this issue during budget discussions,” he said. -he declares.
Kelly said without action, Connecticut faces a huge job destruction problem on the horizon.
“Connecticut still has to repay the loan it took out to pay residents unemployment benefits during the pandemic,” he said.
“Delaying the full repayment of this loan jeopardizes our unemployment safety net and places a financial burden on the creation of new jobs.”
CBIA is Connecticut’s largest business organization, with thousands of member companies, large and small, representing a wide range of industries from all regions of the state. For more information, please contact Ali Warshavsky (860.244.1929).