Romer: Why replenishing unemployment insurance trust fund is important
Replenishing Colorado’s unemployment insurance trust fund is a key legislative priority at the state Capitol. This issue should be especially concerning to the business community.
First, some background. All employers pay into the fund to provide unemployment benefits. The fund is insolvent, and the state owes $1 billion to the federal government to repay an existing loan. Gov. Jared Polis has proposed providing $600 million to help pay down the debt and assist small businesses as their fees rise in the coming years.
We applaud the governor for this investment, and we are part of a coalition of business advocates advocating to the Legislature that even more is needed to avoid crushing future costs to our businesses.
From the Common Sense Institute: Colorado’s unemployment levels spiked in early 2020 and caused the state’s unemployment insurance trust fund to become deeply insolvent. As of July 2021, the fun’s balance is -$1.014 billion and is not projected to become solvent until the 2024 fiscal year. Because employers are responsible for paying payroll taxes to the trust fund, a depleted fund forces Colorado businesses to pay high payroll taxes on each employee and incur financial harm as a result.
The coalition sent a letter to the Legislature advocating for investment to backfill the unemployment insurance trust fund. It read in part: On behalf of employers across Colorado, we are reaching out to share our concerns with the long-term effects of the pandemic and the opportunities for economic recovery.
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The pandemic has continued to strain Colorado’s economy, impacting businesses of all sizes and altering the fabric of our local communities. For nearly two years, our state’s job creators have endured extreme financial uncertainty, an ongoing worker shortage, supply chain issues, inflation, new government regulations and public health shutdowns.
In this session, the state Legislature can provide real relief to businesses and their employees across Colorado, setting us on the course for recovery for years to come. One of the single most effective actions that can be taken to accomplish this goal is replenishing the fund, which is funded solely on the backs of employers to compensate workers for unemployment claims.
That’s why we’re asking you to pass Gov. Polis’ budget proposal to provide at least $600 million in relief to the UITF or any similar funding effort using federal or general fund dollars. Doing so not only supports our local businesses impacted by the pandemic but also supports employees, their families and our communities.
Unless legislators act now, every business in Colorado will face significant premium increases in the coming years — especially those that had to lay off workers through no fault of their own. It would be unconscionable to put this burden on the backs of businesses in these already difficult economic times.
These premium increases will directly impede our recovery and will be felt across the board by Colorado’s workforce, small businesses and consumers. Nearly 30 other states have already taken similar action to help businesses with these premium increases, and it’s critical that Colorado plays a leading role in our national recovery by addressing this issue.
On behalf of employers across Colorado, we thank you for your attention to this critical issue and ask you to support unemployment insurance relief to help employers hire more workers, pay strong wages and prevent cost increases for customers.
We’ll continue to advocate for the replenishment of the unemployment insurance trust fund and other issues in Denver that impact our business community.
Chris Romer is president & CEO of Vail Valley Partnership, the regional chamber of commerce. Learn more at VailValleyPartnership.com.