THE PRESIDENT and CEO of the Greater Boston Chamber of Commerce says the business community was caught off guard just like everyone else by the news that the state’s unemployment insurance trust fund may be in far better financial shape than anyone thought.
“I’d say we’re confused and waiting for information,” said Jim Rooney.
Rooney said until last week he assumed the trust fund, which is funded by assessments on businesses and used to pay claims by people who lose their jobs through no fault of their own, was running a huge deficit because of the pandemic.
With companies facing huge increases in their unemployment insurance assessments to pay off the COVID-induced deficit, the business community in April coalesced behind a plan to lower the size of the assessments by spreading them out over 20 years. The plan called for the state to issue bonds for as much as $7 billion, use that money to stabilize the trust fund, and have the business community through their assessments pay off the bonds, plus interest, over 20 years.
The business community also advocated for using federal American Rescue Plan Act money and state surplus funds to cut the size of the unemployment insurance deficit before borrowing the money, thus reducing the overall financial burden on the business community.
Rooney said the Chamber pushed for diverting $2 billion in federal ARPA money to reduce the size of the deficit. Gov. Charlie Baker advocated for $1 billion. Legislative leaders backed $500 million, with the possibility of raising that amount to $1 billion later.
But then last week the very existence of a deficit itself was called into question when Sen. Patricia Jehlen of Somerville highlighted federal data suggesting the deficit had largely vanished. The federal numbers indicated the trust fund had a balance of $2.9 billion, enough to leave a small surplus after paying off a $2.3 billion debt owed to the federal government for money it loaned during COVID to keep the unemployment insurance fund solvent.
The surprising information emerged during debate on a Republican bid in the Senate to divert another $500 million in federal aid to reduce the size of the deficit in the unemployment insurance trust fund. The diversion would have brought the totto $1 billion. That amendment failed, but the original $500 million remained in the bill, which is expected to come up for a final vote in the Legislature in the next few days.
Rooney said Jehlen’s remarks were the first he had heard the deficit may have vanished or at least significantly shrunk. The administration mysteriously stopped issuing monthly reports on the status of the trust fund in June and said nothing about the federal data until Jehlen raised the issue last Wednesday.
It wasn’t until Friday that Rosalin Acosta, the secretary of labor and workforce development, acknowledged the existence of the federal numbers but said she wasn’t prepared to provide any details on the financial status of the fund. She said the situation was fluid because there were a lot of federal debits and credits that needed to be reconciled.
Rooney said he doesn’t know what to make of the situation. “I’m not second-guessing our advocacy,” he said. “But if it was premised on wrong information or wrong estimates, then we need to regroup on it.”
Rooney said it would be good news if the problem isn’t as bad as originally expected, and the federal aid could be used to address other pressing needs. “It’s a lot of money, especially at a moment when there are a lot of demands on that money,” Rooney said.
The business leader also said his members are not looking to escape their responsibilities to the unemployment insurance trust fund. “The business community is not looking for a discount,” he said. “We’re just looking for fairness in making up the deficit.”