BOSTON (NEWS10) – The Baker-Polito Administration re-filed unemployment insurance legislation initially filed last month. The Governor’s legislation aims to maintain unemployment benefits and provide an estimated $1.3 billion in unemployment insurance relief to the Commonwealth’s employers over two years.
In addition to a two-year unemployment insurance tax schedule freeze, the legislation also proposes financing designed to ensure the ability for the Unemployment Insurance Trust Fund and federal borrowing to be repaid in a responsible and affordable manner.
The main points of the legislation include:
Short term employer tax relief through a two-year tax schedule freeze
Current Massachusetts unemployment legislative statute requires the employer tax schedule to increase from schedule E to schedule G. This would cause an average per employee tax increase from $539 to $866 – a nearly 60% increase over the previous year. Remaining on schedule E for 2021 and 2022 slows annual employer contribution growth from $539 average per employee costs in 2020 to $635 in 2021 and $665 in 2022.
Authorization for the issuance of special obligation bonds for the purposes of repaying federal advances
In order to fund the increases in demand on the unemployment system, the Commonwealth has received federal cash advances. Through the issuance of bonds, the Commonwealth will be able to ensure positive trust fund solvency to enable the continued payment of benefits. The use of capital markets also allows Massachusetts to avoid paying high federal tax increases on employers regardless, of their experience rating, if federal advances are not repaid by November 2022. Bonds issued will be supported by an unemployment obligation assessment and will not be general obligations of the Commonwealth.
Establishes an employer surcharge on contributory employers
In 2020, all federal advances taken to pay benefits are interest free. However, interest on federal advances will begin to be charged starting this month. The first interest payment is due in the Fall of 2021 and it cannot be paid from the state unemployment trust fund, per federal law. To fund interest payments on repayable advances, the legislation also establishes a separate fund to house extra money. The passage of this provision authorizes the Department of Unemployment Assistance to make this assessment but does not require the surcharge if interest is waived through future federal legislation.