With tax collections continuing to exceed expectations, Gov. Charlie Baker on Wednesday pushed lawmakers to act on his plan to use part of the surplus from last year to deliver unemployment insurance relief to small businesses.
Baker in August filed a nearly $1.6 billion spending bill that would direct $1 billion of a roughly $5 billion surplus toward the trust fund used to pay unemployment claims. Other surplus money would be used to bolster the state’s reserves, fund union contracts and support rate increases for human services providers.
Due to the effects of the COVID-19 pandemic on the economy, the Legislature authorized up to $7 billion in borrowing to help small businesses avoid steep increase in the unemployment insurances taxes they pay to cover benefits, but that would still need to be repaid over time.
“Thanks to a strong recovery and smart budgeting, MA has a surplus – it’s time for lawmakers to return those surplus tax dollars and pass our plan to deliver small business relief,” Baker tweeted, sharing a CommonWealth Magazine article about September tax collections.
The surplus Baker has proposed to spend on small business relief was from fiscal year 2021, which ended on June 30, but tax revenues have continued to come in strong in fiscal year 2022 and beat projections by $500 million in September.
Beacon Hill Democrats have not said whether they intend to use some of the surplus to reduce the unemployment insurance liability for small businesses, or if they might tap into the nearly $5 billion in American Rescue Plan Act funds to reduce the size of the tab facing employers over the next 20 years.
Some business groups, including Associated Industries of Massachusetts, have urged the Legislature to use both sources of funding for UI, while the Massachusetts Budget and Policy Center said targeted grants and loans would be a better way to support employers.
On the day of the Legislature’s final ARPA hearing Tuesday, the state chapter of the National Federation of Independent Business said it was “unfair” to demand that employers pay back the full $7 billion deficit that resulted from pandemic layoffs, urging the Legislature to follow the lead of more than 30 other states that have used some ARPA funds to replenish their UI systems.
Retailers Association of Massachusetts President Jon Hurst also retweeted the governor Wednesday.
The budget bill to close out fiscal year 2021 is due this month, with Comptroller William McNamara needing the plan to be enacted and signed by Baker before he can close the state’s books. The deadline for that to happen is Oct. 31.
