Businesses Appeal For Beacon Hill To Lower 'Catastrophic' Unemployment Tax Bills
Business leaders in Massachusetts have launched an urgent lobbying campaign to get Beacon Hill to lower a surprise increase in their unemployment insurance tax bill.
An apparently large number of business owners in Massachusetts, who believed they had been spared an increase in what they must pay to the state’s Unemployment Insurance Trust Fund this year, have sticker shock as a result of a surprise surcharge.
An online poll by the Springfield Regional Chamber found a quarter of the businesses that responded reported an increase of 200 percent or more in their assessment for unemployment insurance.
"From a dollar perspective, I'm hearing anything from a couple of thousand dollars to I know one employer as a $300,000 bill and another has an over $2 million bill," said Chamber president Nancy Creed.
She said the increase for some businesses is “catastrophic.”
Responding to the Chamber's poll, business owners said they may be forced to layoff or furlough workers, freeze hiring, or reduce benefits.
" It will have a dramatic workforce effect," Creed said.
The East of the River Chamber of Commerce, which represents businesses in East Longmeadow, Hampden, Longmeadow, Ludlow, and Wilbraham, hosted a webinar on the issue Thursday with more than 100 participants.
Charlie Christianson, the president of the ERC chamber, urged business owners to immediately contact their state legislators.
"We need everybody that is on this call to take a look at the impact on your organization and share it with your legislators," he said. "We've got a number of legislators who are aleady on board and taking actions to try to make this happen."
Representatives of about 20 business groups including the Retailers Association of Massachusetts and the Massachusetts Restaurant Association signed a letter to Gov. Charlie Baker and legislative leaders urging them to find a way to roll back the steep increase.
Faced with a $4 billion deficit in the unemployment fund, Massachusetts lawmakers in March authorized borrowing to replenish it and also froze the basic unemployment tax rate. But legislators did not change the solvency assessment which is used to pay benefits to workers let go from businesses that have gone under.
The solvency assessment comes from a formula that is set in state law, said Suzanne Murphy, the CEO of Unemployment Tax Control Associates, who spoke at the ERC chamber’s webinar.
"So we have this statutory mechanism that triggered a 1,600 percent increase in the solvency assessment ... as a result of paying historic claim levels in 2020," Murphy said.
She said unless there is legislative intervention, employers will be on the hook.
" It is a staggering number at a very inopportune and vulnerable time for our business community," Murphy said.
The Baker administration announced Thursday night that the deadline for businesses to make the first quarter employment insurance premium payment has been extended to June 1st – giving state officials a month to come up with a way to lower the surcharge.
One fix that has been suggested is for the state to use money it has coming from the federal American Rescue Plan, which is reportedly what some other states plan on using to replenish their unemployment trust funds.
But it is not clear yet if this approach is legal because of language in the Rescue Plan that prohibits its use to lower taxes.