Last week, the PA Chamber and National Federation of Independent Business urged lawmakers to allocate federal funding to address Pennsylvania’s outstanding unemployment compensation debt to the federal government and help employers avoid tax increases.
In a letter to the state House and Senate Appropriations Chairmen, the coalition noted that while UC claims have decreased, the debt to the federal government remains. If left unresolved, employer tax rates are scheduled to automatically increase in the coming years – which will cost employers hundreds of millions of dollars beyond the billions in UC taxes already paid annually.
The PA Chamber and NFIB explained that the pandemic and broad business shutdown orders prompted historic demand on the state’s UC system, eventually depleting the UC Trust Fund and forcing the Commonwealth to borrow from the federal government to pay the state share of benefits. The federal government has authorized states to utilize American Rescue Plan funding to address UC, and many states have embraced the opportunity to help employers avoid tax increases.
During a recent House Appropriations Committee budget hearing, lawmakers discussed with PA Department of Labor and Industry Secretary Jennifer Berrier the potential for urging federal pandemic relief to pay down a $736 million debt in the UC Trust Fund as other states have, noting that the cost will be passed on to employers if the issue is unresolved by November.