Connecticut’s Senate has reached a bipartisan agreement to restore the state’s Unemployment Insurance Trust Fund by a 34-0 vote.
The measure also received unanimous approval, 146-0, from the House last month.
HB 6633 makes a variety of reforms to the state’s unemployment system that will take effect in 2024, including:
- Raising the taxable wage base from $15,000 to $25,000, then indexing it to inflation.
- Reducing the maximum solvency tax rate from 1.4% to 1%.
- Reducing the minimum and expand the maximum experience tax rate from 0.5-5.4% to 0.1-10%.
- Increasing the minimum base period earnings required to qualify for unemployment benefits from $600 to $1,600, then indexing it to inflation, except when the federal government is providing additional benefits to unemployment insurance claimants.
- Freezing the maximum weekly benefit amount for four years.
- Deferring unemployment insurance benefits until a claimant’s severance payments are exhausted.
The state’s nonpartisan Office of Fiscal Analysis projects that when the bill takes effect, the reforms will save the unemployment fund $84.25 million annually while generating $130.9 million in new annual revenues.
As previously reported, the fund has been insolvent for 48 of the last 50 years, forcing the state to borrow money from the federal government during economic downturns. During the Great Recession, Connecticut borrowed $1.25 billion from Washington, a debt repaid with $85 million in interest over six years.
“This package of reforms that I will soon sign into law is the most significant set of reforms ever enacted in the history of Connecticut’s unemployment system,” Gov. Ned Lamont said.
“With this legislation, we are reinforcing the long-term solvency of the state’s unemployment insurance fund, ensuring that it will be there for those who need this assistance in the future while also providing predictability for our state’s employers when it comes to their contributions.”
“Many of the changes in the bill represent reforms CBIA has advocated for since the end of the last recession to address one of the business community’s top concerns – the need for more predictable, certain and stable policies,” CBIA President and CEO Chris DiPentima said.
“These reforms will help drive the state’s post-pandemic economic recovery, easing financial uncertainty, preventing future tax hikes and assessments on employers to cover fund shortfalls, and strengthening our workforce,” he said.