Senator Kissel: $40 Per Job Fee Hike and Potential Solutions to Get Public Airing at Thursday, February 10 Forum

February 2, 2011

State Senator John A. Kissel (R-7) today said that the co-chair of the legislature’s Labor and Public Employees Committee has told him that his proposal to address a ‘hidden tax’ on the horizon in Connecticut has merit and that it will be discussed during a legislative forum at 1 PM on Thursday, February 10.

With the state Department of Labor (DOL) expecting to levy a new, $40 million tax on Connecticut businesses this August, Senator Kissel has proposed a bill to require the legislature to approve of the assessments before they go into effect.

“I had a good discussion with State Senator Edith Prague about this,” Senator Kissel said. “She agrees with me that this new assessment on businesses could not come at a worse time. The tax works out to about $40 per employee, so a Mom and Pop shop with 10 employees takes a $400 hit. I am pleased that we are talking about this in a bipartisan fashion and I am looking forward to attending Thursday’s forum. This tax has been flying under people’s radars until now. I thank Senator Prague for recognizing the urgency and importance of this issue and providing it with the visibility it deserves.”

In December, state businesses were informed by DOL that an unemployment compensation surcharge will cover interest the state of Connecticut owes on $530 million in federal loans. The state took out the loans in 2009 in order to keep the state’s unemployment compensation trust fund afloat. The interest waiver on the loans expired at the start of 2011, and Connecticut must begin paying that interest this summer.

Senator Kissel said the state’s unemployment fund lies outside of the state budget’s General Fund and is therefore outside of the legislature’s jurisdiction.

“The bill has come due and Connecticut businesses are on the hook,” Senator Kissel said. “The problem is, the state legislature has absolutely no say in the matter. Under current state law, elected officials don’t have a voice in the process. The law needs to change.”

“The public needs to know that this $40 million assessment is just the beginning of the pain for state businesses because the August surcharge only addresses the interest on the federal loan and not the principal,” Senator Kissel said. “I want to make sure my colleagues are aware of this other looming debt hanging over all businesses in Connecticut. Ultimately, businesses will have to keep the unemployment compensation trust fund solvent. Therefore, the shared pain Governor Malloy talks about is already heading towards businesses in our state.

“By looking at all our debts and deficits holistically we can begin to truly assess where we stand as a state and begin addressing the systemic problems that have gotten us here. So I don’t think we currently have just a $3.6 billion problem, I think we have a $4.1 billion problem and growing.”

Senator Kissel’s bill # 484 is before the General Assembly’s Labor and Public Employees Committee. The Labor and Public Employees Committee’s informational forum will be held at 1 PM on Thursday, February 10 in Room 2 E of the Legislative Office Building.