Department of Labor (CTNewsJunkie file photo)

The Democrat-controlled legislature’s proposal for using about $2.8 billion in federal funds from the American Rescue Plan differs from Democratic Gov. Ned Lamont’s plan when it comes to its contribution to the unemployment trust fund. 

Lamont’s plan, which was announced before the state knew it would be receiving about $200 million more in additional federal funding, proposes to spend about $50 million to lower the unemployment trust fund debt incurred by the number of people filing for unemployment during the pandemic. 

The Appropriations Committee voted Monday to increase that to $310 million. 

“Our investment could pay off about 25 percent of the debt in that fund, which would help every single business in Connecticut,” Sen. Cathy Osten, D-Sprague, said. 

Connecticut’s largest business lobby applauded the move. 

“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,” Connecticut Business and Industry Association President and CEO Chris DiPentima said. 

Connecticut has borrowed $725 million from the federal government to maintain unemployment benefits during the pandemic. That number is expected to grow. 

Dipentima has said it took Connecticut businesses five years to pay off the $1 billion it borrowed during the Great Recession. He said businesses will be on the hook to repay the money the state borrowed if the state doesn’t step in and contribute more. 

Connecticut would be the 25th state to use some 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,” CBIA’s Eric Gjede said. “It is great to see so many lawmakers also realizing the significance of this program, and taking quick legislative action to provide relief.”

Lamont still believes it might not be the best use of federal funds. 

“We borrow money for the unemployment trust fund at a very low rate. Given inflation, they probably almost pay us,” Lamont said during his Monday coronavirus briefing. “If you want to pour some money in there, you’d have to take it out of education or something else so there’s some tradeoffs that have to be made.”

The committee made other changes too. 

“The legislature’s ARP budget continues to help Connecticut’s severely underfunded nonprofits, providing them with nearly twice as much as Governor Lamont proposes – $90 million compared to his $50 million over three years,” Osten said. 

She said it also dedicates $50 million over two years for local, community park improvements, where the governor has none. 

“If nothing else, this past year has shown us the value of outdoor spaces for kids and families,” Osten said. 

The said the legislature also invests $130 million over three years for workforce development compared to the governor’s $103 million – that’s 26 percent more. 

The final decision on the use of the dollars will be part of state budget negotiations between the legislature and the governor’s office.