The Massachusetts Legislature overwhelmingly approved a supplemental budget last week that would freeze Unemployment Insurance tax rates for 2012 and head off an automatic 31 percent tax increase for employers.
The $130.7 million measure also eliminates a sunset provision that would have ended the popular Workforce Training Fund Program on December 31 and require state officials to post online the full cost-benefit analysis of new regulations.
The Senate passed its version of the bill 35-0 on Friday, while the House of Representatives passed its own bill by a 154-to-1 margin on Wednesday. Because of minor differences between the House and Senate bills, AIM will continue to work with both chambers to ensure that the final legislation that is sent to the Governor includes all the measures that employers support.
“Employers commend the Legislature for acting quickly to freeze Unemployment Insurance rates at the current Schedule E, a move that will avoid an automatic jump in UI costs from $715 per employee to $935 per employee,” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.
“We urge Governor Patrick to sign it. We also hope that 2012 will be the year that policymakers make meaningful structural reform to the UI system.”
AIM maintains that the Unemployment Insurance increase is unnecessary since the fund used to pay jobless benefits in Massachusetts posted a balance of nearly $100 million at the beginning of the year. AIM projects that the surplus will grow to between $300 million and $400 million even if rates are frozen.
The UI rate increase was effective at the beginning of the year, but the Legislature still has time to approve a freeze because employers don’t have to start paying the tax until the end of the first quarter.
Three key state senators wrote a letter to Senate President Therese Murray January 5 urging the branch to freeze the rates at their current level. The letter - signed by Sen. Barry Finegold (D-Andover), Sen. Michael Rodrigues (D-Westport) and Minority Leader Bruce Tarr (R-Gloucester) - argued that freezing unemployment insurance rates would ensure economic stability for small business owners and create a climate for job growth as businesses recover from the recession.
AIM is also pleased that Legislators are looking to lift the sunset provision on the commonwealth’s flagship program for improving the skills of Massachusetts residents. The Workforce Training Fund Program has provided $193.2 million in grants since its inception to some 2,500 Massachusetts employers to train 277,351 workers.