Colorado businesses are pushing state lawmakers to alleviate pressure on their bottom lines by putting at least $600 million toward a trust fund benefiting unemployed workers.
The call to action came Tuesday as 75 business owners, trade associations, and other entities urged legislators to back Gov. Jared Polis’ budget proposal for fiscal year 2023, which would allocate that money to Colorado’s unemployment insurance trust fund. The fund is meant to compensate laborers for unemployment claims, but it ran out of money in August 2020 following the jump in job losses and benefit payments during the coronavirus pandemic, the Colorado Department of Labor and Employment reported.
Employers now fear the burden to replenish the state trust fund will deliver another financial blow, as higher premium payments loom in the coming years.
“Without any financial relief, that all falls on the shoulders of employers to have to pay back, through no fault of their own,” said Loren Furman, president and CEO of the Colorado Chamber of Commerce, who called it “a huge concern.” Her association led the effort to send Tuesday’s letter to lawmakers, which highlighted the nationwide labor shortage, supply-chain issues, inflation, and COVID-related shutdowns as other issues also confronting business owners.
Employers face $5.3 billion in extra unemployment insurance payroll taxes between 2023 and 2027, compared to the baseline in 2020, according to the Common Sense Institute, a research group funded by the chamber.
“The impacts of this tax are tremendous, and though necessary to rebuild our unemployment insurance system, they will slow the efforts to revive our economy,” said CSI vice president of policy and research Chris Brown, who authored the study.
The price tag includes $4.1 billion in state taxes to build up the trust fund and $1.2 billion in federal taxes to repay Colorado’s federal loan plus interest, the Greenwood Village-based organization reports. It adds that Colorado is only one of nine states with a federal loan for its trust fund.
Colorado nearly depleted its unemployment insurance trust fund during the dot-com recession in 2001 and fully depleted it in the Great Recession following the housing bust, which also required borrowing money from the federal government. The state issued $630 million in unemployment compensation bonds in June 2012 to repay those federal obligations.
Brown’s analysis finds that Polis’ budget request would salvage $560 million for business owners by 2027.
Although Furman predicts both Democrats and Republicans will back the governor’s proposal to add to the state trust fund, “the question will be, will we see support to the tune of the $600 million funding allocation?” she said in a telephone interview.
For Roger Bartlett, president of Affordable Concrete LLC, the government funding would let him continue providing bonuses and pay increases to his employees. Bartlett took several hits during the pandemic, with a slump in production, and shortages in both material and workers.
“Small businesses are really struggling right now,” said Bartlett, who signed the Tuesday letter. He described the $600 million proposal as “a good start” to lift the strain off of his company and others.
However, if not addressed, the raised premium payments “would be a problem for us,” said Dawn Alexander, executive director of the Early Childhood Education Association of Colorado, another letter signatory. “We’ve endured enough as an industry.”
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