A legislative proposal that would nearly double the reserve of Connecticut's unemployment insurance fund to $1.1 billion is raising red flags from the business community, which says the measure will lead to long-term higher taxes for employers and hurt future job growth and capital investment in the state.
The state's variable unemployment tax is a significant business expense, and could cost some employers as much as $1,160 per employee by 2015. Passage of the bill could mean employers end up with an elevated unemployment insurance tax rate for the rest of the decade.
The bill has been proposed by the state Department of Labor as a fix for Connecticut's unemployment insurance trust fund, which blew through its reserves in 2009 as a result of the state's high jobless rate. Connecticut has borrowed $727 million from the federal government so far in order to continue to pay jobless benefits, and the borrowing continues.
To prevent future fund insolvencies, which have occurred during past recessions, state officials want to raise the trust fund's reserve level from $626 million to $1.1 billion. The legislation would accomplish that by keeping the fund solvency tax -- one of the two taxes employers pay to fund jobless.....
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