Connecticut Shouldn’t Put Costs of Federal Unemployment Loan on Backs of Small Businesses
NFIB, the leading small business association in the nation with thousands of members in Connecticut, is concerned about how the state plans to pay back a new loan for up to $1.1 billion from the federal government to cover the drastically increasing cost of unemployment benefits. Last week there had been 430,000 unemployment applications in Connecticut since businesses were forced to close or limit operations due to the pandemic, a number that would normally be seen over a two-year period.
“When so many small businesses in the state are shut down through no fault of their own and their cash reserves have run dry, it would be cruel to pile added costs on these business owners as they struggle to come back,” said Andrew Markowski, state director of NFIB in Connecticut. “If the goal is to restore the Connecticut economy and reduce unemployment, it doesn’t make sense to make it harder for small businesses financially.”
During the Great Recession, Connecticut took a similar loan from the federal government to cover unemployment costs. To help pay back the loan it placed “special assessments” on small businesses, which made recovery at the time more difficult. NFIB doesn’t want a similar hidden tax increase now.
“Most small business owners believe it will be many months or even next year before they can recover from this economic crisis which was caused by the pandemic,” added Markowski. “Raising costs to make up for an unemployment loan wasn’t a good policy after the Great Recession, and it would be a bad decision now, harming small businesses during the pandemic recovery.”
NFIB hopes Congress will consider grants instead of loans in future pandemic stimulus funding as state unemployment costs are exploding while state revenues are imploding.