Gov. Ned Lamont

State policymakers announced a bipartisan agreement Tuesday to shore up Connecticut’s unemployment trust fund and potentially reduce the tax burden on close to three-quarters of state businesses.

The proposal was announced at a rare press conference which saw Democrats and Republicans as well as business and labor leaders praising the same policy.

If adopted by the legislature, the bill would make several changes to the unemployment trust fund beginning in 2024, which Gov. Ned Lamont called “historic.”

“Our unemployment trust fund has been technically underwater — bankrupt for 48 out of the last 50 years,” he said. He added that the COVID-19 pandemic has exacerbated the problem. “This is a really fundamental reform that’s taking place right now. It’s a reform in the sense that this could represent … a tax cut or at least reduced contributions for about 73% of the small businesses.”

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Included in the proposal are provisions to increase the taxable wage base from $15,000 to $25,000 then index the base to inflation. It would increase the amount of money a worker must earn in order to qualify for unemployment from $600 to $1,600. It also decreases the maximum solvency rate and changes the window of the experience tax rate. 

The bill also requires unemployed workers to exhaust their severance payments before collecting unemployment, and it would delay increases in the maximum weekly benefit amount. 

Rep. Sean Scanlon

Rep. Sean Scanlon, a Guilford Democrat who is co-chairman of the Finance Committee, said he and Rep. Holly Cheeseman, the committee’s ranking Republican member, reached an agreement with business and labor representatives over the weekend. Scanlon said he expected the bill to pass out of the committee later this week with bipartisan support.

“Business, labor, Republicans, Democrats, we came together to get this done because people of Connecticut wanted us to get this done,” Scanlon said.  

The unemployment trust fund has been under exceptional strain throughout the pandemic. Labor Commissioner Kurt Westby said the state has borrowed around $712 million to support the fund. On Tuesday, he said the fund had a $3.8 million balance and he expected additional borrowing to be necessary. Westby said it would take time for the proposal to put the trust fund in the black.

“It will definitely be years before we hit solvency,” he said. 

In recent months, Republicans have argued with the governor on how best to address the problem. House Minority Leader Vincent Candelora has called on Lamont to use federal stimulus dollars to pay down the debt and shield Connecticut businesses. Although the governor has not agreed to do so, Candelora said the bill announced Tuesday would help the state’s industries. 

“At times like these, compromise is very important. I just want to thank those industries for coming to the table and showing a willingness to listen to all sides and come up with a proposal that I think is going to put Connecticut’s economy in a better position,” Candelora said. 

CBIA President Chris DiPentima

Chris DiPentima, president and CEO of the Connecticut Business and Industry Association, also praised the agreement for setting the unemployment fund on a solvent course.

“It brings predictability and stability to a very broken fund. So I know long-term solutions and long-term reform are not something that is very exciting today, but there are things we look back on years down the road and realize how important they were,” DiPentima said. 

David Roche, president of the Connecticut State Building and Construction Trades Council and general vice president of the Connecticut AFL-CIO, said the solvency of the unemployment fund is vital to construction workers.

“There are times, because we live in the Northeast, when we just can’t work. There’s snow and rain, we go home. If it lasts, we can be out of work for a long time. And so them unemployment benefits are vital to us being able to stay here in Connecticut,” Roche said.