For months, NFIB and the Massachusetts business community urged lawmakers to use some of the billions of dollars in federal American Rescue Plan Act (ARPA) aid and surplus tax revenue to help pay down a $7 billion unemployment insurance tax deficit. A deficit that wasn’t created by employers, but rather the state mandated shutdowns and restrictions of the pandemic.
Governor Baker acted first by proposing, in his supplemental budget, that $1 billion in surplus tax revenue be allocated to the UI Trust Fund. But the House and Senate had other plans and ignored the Governor’s proposal. Instead, they presented their own Covid relief bill that was packed with legislator’s spending priorities. Their plan also drastically cut the $1 billion for UI in half.
Despite pleas from thousands of small business owners across the Commonwealth, members of the Massachusetts House opted to only allocate $500 million for UI and earmark the other $500 million for worker bonus pay. While states like Maryland provided $1.1 billion for UI and Ohio and Georgia offered $1.5 billion from federal funds, Massachusetts (with a far higher deficit) only set aside $500 million. This was a major disappointment.
To make matters worse, lawmakers inserted a provision into the package to notify unemployment recipients that certain overpayments will be waived. Therefore, some unemployment recipients that received UI overpayments, and were expected to pay the excess money back, can seek waivers. Essentially, employers will be paying the bill for this policy through their UI taxes, further depleting the meager $500 million offering provided in the House’s ARPA spending bill.
This legislation now moves to the Senate, where NFIB will continue to advocate for a restoration of Governor Baker’s original $1 billion UI allotment. We will also stress that if lawmakers want UI overpayments waived, the state should pay for it, not small businesses.