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Governor Rell Joins NGA Colleagues in Backing Request for Federal Action on Unemployment Aid
Calls for Congress To Consider Issue During Final Days of Session

For immediate release
November 14, 2010

CONTACT: Adam Liegeot, 860 301 4055
Adam.Liegeot@ct.gov

 Governor M. Jodi Rell has joined with the Governors of Delaware and Virginia in urging Congressional leaders to help states coping with extraordinarily high rates of unemployment and the related costs of providing extended Unemployment Insurance (UI) benefits to job seekers.  The current Congress returns for a final session on November 15.  

Governor Rell joined Delaware Governor Jack Markell – Chairman of the National Governors Association’s Education, Early Childhood and Workforce Committee – and Virginia Governor Bob McDonnell, the panel’s Vice Chairman, in a letter to current House Speaker Nancy Pelosi, Minority Leader John Boehner, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell.
 

“The worst recession in decades, coupled with an agonizingly slow recovery, has put immense pressure on the UI systems of almost every state,” Governor Rell said. “Often, job-seekers have struggled for months to find a new position – and far too many have been unable to do so. UI benefits have been a lifeline for these struggling families.
 

“Many states, Connecticut among them, have been forced to borrow from the federal government to shore up their UI funds because of the record demand for assistance,” the Governor said. “Ordinarily these loans would be coming due now – meaning Connecticut employers would be facing increased unemployment insurance taxes to help pay them off.  But this would be the worst time to increase the burden on our employers and I am once again urging Congress to find ways to relieve the burden on the states and our businesses until the economy has truly recovered.”
           

The letter urges Congress to take three steps to bolster state UI funds:
 

  • Extend interest-free borrowing for State Unemployment Insurance Trust Funds for 2 years. To date, 32 states have borrowed more than $40 billion to pay state unemployment compensation benefits to jobless workers. The American Recovery and Reinvestment Act – the federal stimulus bill – provided interest-free loans to states through December 31, 2010. Without an extension of this provision, states will be required to increase payroll taxes, reduce benefits or both.
     
  • Provide a two-year Federal Unemployment Trust Fund Account (FUTA) tax credit in states with solvent Unemployment Insurance Trust Funds. Currently the FUTA tax is levied at 6.2 percent on the first $7,000 earned per employee per year. An additional FUTA tax credit of 0.5 percent in states with solvent Unemployment Insurance Trust Funds will promote job creation and stimulate economic recovery.
     
  • Allow states with solvent Unemployment Insurance Trust Funds to maximize the use of interest earned on the funds for two years. Current federal law limits the use of interest earned on state UI Trust Funds. By allowing states with solvent UI Trust Funds to invest earned interest in innovative strategies to help claimants get reemployed quickly or in automation or program administration; states can improve program integrity and limit the high and long-term unemployment impacts on businesses.
     

Governor Rell has repeatedly recommended Congress adopt a variety of strategies to help states cope with high unemployment, including a delay in the mandatory FUTA tax increases that all employers must pay to support the UI program. Under federal law, tax increases are required when a state has outstanding Trust Fund loans for two years.

Media contact: Nancy Steffens  (860) 263-6535


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