COVID-19 Relief Spending Plan Includes $310M for Unemployment Debt

Issues & Policies

The legislature’s Appropriations Committee this week unanimously approved its plan for spending federal American Rescue Plan Act funds, including allocating $310 million to help address the state’s unemployment fund debt crisis.

The committee was reacting to the spending plan the Lamont administration released April 30 for spending almost $3 billion in federal COVID-19 relief funding.

Appropriations Committee co-chairs Sen. Cathy Osten and Rep. Toni Walker.

Both the state House and Senate must approve the Appropriations Committee plan, which also faces additional negotiations between the Lamont administration and the legislature.

The committee’s unemployment fund allocation was more than six times that proposed by the administration, with additional increases also approved for economic development and workforce initiatives.

Appropriations co-chair Sen. Cathy Osten (D-Baltic) said the committee worked in a bipartisan way to develop a spending plan that began with a focus on supporting job growth.

‘Looming Crisis’

The state will likely borrow over $1 billion from the federal government to support pandemic unemployment claims after the trust fund became insolvent last year.

CBIA last month led a coalition of small business groups calling for the state to use federal relief funds to help address the unemployment debt, which threatens Connecticut’s recovery from the pandemic.

“This is a looming crisis and businesses in Connecticut would have been paying down this debt for many years to come—threatening jobs recovery and the state’s economic recovery,” CBIA president and CEO Chris DiPentima said.

“Businesses in Connecticut would have been paying down this debt for many years to come—threatening jobs recovery.”

CBIA’s Chris DiPentima

Eric Gjede, CBIA vice president for government affairs, thanked Osten, co-chair Rep. Toni Walker (D-New Haven), and committee members for supporting the proposal.

“The business community truly appreciates the proposal put forward by Sen. Osten and Rep. Walker,” he said.

“If this proposal is enacted, it will take a huge weight off the shoulders of employers, helping us emerge from this pandemic and get back to creating jobs.”

‘Positive Step’

Committee ranking member Rep. Michael France (R-Ledyard) called the plan “a positive step forward for the state,” noting the “greater collaboration” between Republicans and Democrats.

Connecticut would be the 25th state to use federal stimulus dollars to help reduce unemployment debt.

“We have seen in the last year how important the unemployment compensation trust fund is during a crisis,” Gjede added.

“It is great to see so many lawmakers also realizing the significance of this program, and taking quick legislative action to provide relief.”

Absent that relief, employers would be on the hook for paying off those loans and the interest.

It took six years of higher unemployment taxes and assessments to pay off the $1 billion the state borrowed after the 2008-2010 recession.

Economic Development

The committee’s plan appropriates $85 million for tourism and hospitality, with $45 million dedicated to support reopening Connecticut’s economy and restarting tourism, including hotels, motels, campgrounds, and transportation. 

The funding will also be used to modernize regulatory and licensing requirements, with $40 million intended for marketing.   

The committee proposed about $32.5 million for workforce development initiatives.

Additionally, the committee appropriated $20 million to support local events such as fairs, festivals and concerts—approximately $13.4 million more than the administration’s plan.  

The committee proposed about $32.5 million for workforce development initiatives, including short-term certificate programs, small business tax credits, and targeted investments supporting smaller employers.

These funds will be used in conjunction with other funding sources, including bonding and private capital

For more information, contact CBIA’s Ashley Zane (860.244.1169) | @AshleyZane9


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