FOR IMMEDIATE RELEASE
Media Contact:
Emrah Fejzic 978-228-1233 | emrah.fejzic@mahouse.gov
BOSTON, MA – Yesterday afternoon, The Massachusetts House of Representatives unanimously passed a bill addressing the solvency of the Unemployment Insurance Trust Fund. The bill included unemployment system funding, tax relief for small businesses and workers, and paid emergency sick leave.
COVID-19 and its economic consequences created an unprecedented demand for unemployment assistance. The unemployment benefits system is funded by employer payments into the unemployment insurance trust fund. The exceptional demand on the system depleted the fund, bringing it from a balance of $1.6 billion in February 2020 to $2.2 billion in the red by the end of the year. In turn, the House measure authorized the borrowing of $7 billion to return the fund to solvency.
Employers pay into the unemployment trust fund based on the current rate schedule. The rate schedule automatically increases as money in the trust fund decreases. The bleak state of the fund was set to trigger an automatic cost increase, raising the average per-employee cost on businesses from $544 in 2020 to $866 in 2021, an almost 60 percent leap.
To offset the incoming burden on business, the bill included language freezing the rate schedule and halting the drastic increase. The legislation also aligns state law with federal tax law, in order to extend a tax benefit through the Paycheck Protection Program grants – already enjoyed by large corporations – to small businesses in Massachusetts
To further stabilize the state's unemployment system and protect workers, the bill also establishes a paid sick leave program for employees who are affected by COVID-19. A tax break would also be created for unemployed residents, whose household income was 200% or less than the federal poverty level.
During the House floor debate, an amendment from Rep. Josh Cutler (D – Duxbury) was approved and would create a commission to study the long-term solvency of the unemployment insurance trust fund. This amendment incorporated a bill co-filed and advocated for by Rep. Andy Vargas (D – Haverhill) and Rep. Tram Nguyen (D – Andover). The pair successfully co-sponsored and praised Rep. Cutler’s amendment as a critical step in finding solutions to address UI solvency.
Rep. Vargas said:
“From the onset of the pandemic, we heard from small businesses and employers in our district worried about how their unemployment insurance rates would increase dramatically. For months we’ve been advocating to protect our small businesses and workers, while determining a path forward that leads to greater fairness and sustainability of the unemployment insurance trust fund. This bill is a strong and balanced approach to provide urgent aid to workers and employers alike.”
Rep. Nguyen Said:
“I am thrilled that the House passed a balanced bill that reflects the Legislature’s commitment to workers and businesses. Among other measures, the bill incorporates two of my bills, which would provide tax relief to many struggling families affected by unemployment during the pandemic and create a commission to address the chronic problem of unemployment trust fund solvency. This comprehensive bill is an important step in helping families and businesses on their road to recovery.”
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Andy X. Vargas is a Massachusetts State Representative from Haverhill, representing the 3rdEssex District. He is Vice-Chair of the Joint Committee on Economic Development and Emerging Technologies and a member of the Massachusetts Black and Latino Legislative Caucus. He sits on the Committees on Ways & Means, Education, Public Health, and Redistricting.
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