State’s Unemployment Trust Fund Runs Out
Continued job losses, business closings and a high volume of unemployment benefits have all combined to cause Connecticut’s Unemployment Compensation Trust Fund to run out, forcing the state to borrow more than $800 million in federal government funds to keep paying benefits.
The state Department of Labor (DOL) is projecting benefits will total $1.3 billion by the end of the year, far surpassing what the department originally projected. The DOL says it is paying out up to 100,000 claims a week; two years ago, the figure was 40,000.
Employers are the sole source of funding for the Trust Fund and the benefits employees receive from it. When the fund is insolvent, employers must pay a solvency tax to replenish the Fund. This year, employers have already paid the maximum additional 1.4% solvency tax rate and will have to keep paying a solvency tax as long as the fund is insolvent. With the state now borrowing federal funds, employers next year will be faced with another tax to repay the loans.
Connecticut lost 79,100 jobs between March 2008 and August 2009. Economists are foreseeing a continued increase in joblessness well into the next decade.
Thus far, 25 other states, including New York, New Jersey, Pennsylvania and Rhode Island, are facing similar crises and have also had to borrow from the federal government; another 15 states are expected to follow suit in the near future.
For more information, contact CBIA’s Kia Murrell at 860-244-1931 or firstname.lastname@example.org.
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.