CBIA joined other small business groups this week calling for the Lamont administration and lawmakers to address the unemployment debt crisis threatening the state’s economic recovery.
Connecticut borrowed $888 million from the federal government in 2020 and 2021 to pay record-high pandemic-related unemployment benefit claims.
To date, $425 million in loan repayments have been made, with employers covering $300 million and federal COVID relief funds repaying $125 million (plus $26 million in interest).
Employers are responsible for the remaining $463 million loan balance—and face four years of tax hikes, beginning this fall, to cover those repayments.
"It took six years of higher unemployment taxes on employers to pay off federal loans following the 2008-2010 recession and we can't hold that debt over small businesses again," CBIA president and CEO Chris DiPentima said at an April 12 press conference at the state Capitol.
"State and federal unemployment taxes will jump 22% by 2026, money better invested by employers in addressing the labor force crisis, the biggest threat to Connecticut’s economic recovery.”
Small Business Coalition
DiPentima noted that a late March-early April Public Opinion Strategies poll of 500 registered voters found broad support for the state paying down the debt, with more than two-thirds of voters agreeing with the proposal.
CBIA, NFIB Connecticut, the Connecticut Restaurant Association, the Connecticut Food Association, the Connecticut Retail Merchants Association, the Lumber Dealers Association of Connecticut and the Greater New Haven and Quinnipiac Chambers of Commerce attended the press conference.
Three small business leaders—Wendy Traub, president 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 CRA chair—spoke about how those tax hikes hurt their ability to recover from the pandemic.
They were joined by House Republican Leader Vincent Candelora (R-North Branford), Senate Republican Leader Kevin Kelly (R-Stratford), Sen. Craig Miner (R-Litchfield), and representatives Holly Cheeseman (R-Niantic), Laura Devlin (R-Fairfield), Tom Delnicki (R-East Windsor), and Dave Rutigliano (R-Trumbull).
NFIB Connecticut state director Andy Markowski said that while the legislature has made some positive steps recently to help small businesses recover from the pandemic, employers are still hurting and worried about higher costs.
“Here’s what we know: our small business owners are bearing the brunt of the unemployment debt crisis,” he said.
“That's why we are again calling on the General Assembly and the governor to help pay down the hundreds of millions of dollars in remaining unemployment fund debt.”
CRMA president Tim Phelan said retailers of all sizes endured a challenging two years, and the threat of tax hikes makes it tougher to remain in business.
“Legislative action to ease that burden is needed, appropriate, and necessary to better enable retailers to continue their important role in Connecticut’s economic recovery, benefitting their customers and communities,” he said.
Beaulieu said with Connecticut experiencing record surpluses and lawmakers proposing new spending programs, “it’s hard to understand why legislators are unwilling to help small businesses.”
“Small businesses like mine are still working to recover from the pandemic while dealing with new challenges like inflation, the rising cost of goods, and labor shortages,” he said.
“Unless the unemployment debt crisis is addressed, many small businesses will continue to be at risk.”
Traub said Hemlock has been in business for more than 25 years, yet COVID-19 and other challenges, including the threat of higher taxes, threaten to shut down her small business.
“Our business is attempting to grow its workforce, yet there is still a constant fear that the state may, once again, impose operating restrictions or develop new or increased taxes on business owners,” she said.
“This leads to uncertainty and limits our investments in new capital equipment or additional labor. For economic recovery to be successful in Connecticut, we must have faith that the government is recognizing and supporting our efforts.”
'Do the Right Thing'
Romeo said Waterbury-based Fascia's Chocolates did not lay off any employees during the pandemic and like many small businesses, was frustrated at being saddled with paying of the federal loans.
"Lawmakers need to do the right thing and take this burden off small businesses," he said.
Candelora said so far this session, the legislature's efforts to meet the concerns of business leaders has been inadequate or in the case of the Labor and Public Employees Committee’s agenda, "the opposite of what’s needed."
“We have less than a month left in the session to address perhaps the top issue, paying down federal unemployment debt, and I implore my colleagues to revisit this problem during budget discussions,” he said.
Kelly said that without action, tax hikes on employers will "place financial burdens on the creation of new jobs."