Governor Proposes Using $1 Billion for Unemployment System

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Governor Proposes Using $1 Billion for Unemployment System

Budget, Tax, & Finance HR & Employment Law News | August 18, 2021
By: Brooke Thomson

Governor Charlie Baker today proposed to use $1 billion of a budget surplus from last fiscal year to pay down the deficit in the state unemployment insurance system.

The governor characterized the payment as a first step toward addressing an estimated $5 billion gap in the state fund used to pay jobless claims.

Associated Industries of Massachusetts (AIM), the statewide business association, said the proposal provides hope to employers who face potentially crippling unemployment-insurance rate increases to pay for claims caused by COVID-19. The association again called upon elected officials to address the remainder of the unemployment deficit with money from the American Rescue Plan Act (ARPA)

“The 3,300 businesses of AIM deeply appreciate Governor Baker’s good-faith proposal to begin to pay down the unemployment insurance deficit caused by a public-health emergency beyond the control of employers,” said John Regan, President and Chief Executive Officer of Associated Industries of Massachusetts.

“Massachusetts has already frozen unemployment insurance rates and taken steps to moderate a destructive surge in the solvency assessment. The governor’s $1 billion payment is a great start to helping address the UI deficit. AIM also advocates for use of federal stimulus money from the American Rescue Plan Act to stabilize the system and allow the economic recovery to continue.”

AIM is also calling on the Baker Administration to assist non-profit businesses that self-insure their unemployment insurance. The association last week joined with the Massachusetts Non-Profit Network to ask Secretary of Labor and Workforce Development Rosalin Acosta to provide reimbursing non-profit employers another deadline extension for their pandemic-era UI bills until December 31, 2021.

Governor Baker signed one bill in April that will freeze unemployment insurance rates for two years and a second on May 28 authorizing the commonwealth to shift an estimated $7.4 million in COVID-related unemployment claims from the solvency fund to the new Employer Relief Account.

Of the proposed budget surplus transfer, the governor today said, “This transfer will reduce the need to borrow funds for COVID-era claims, and thereby reduce the need for future employer assessments.”