MONTPELIER — Three years after Vermont cut benefits to unemployed workers and began borrowing from the federal government to shore up its unemployment trust fund, Gov. Peter Shumlin hit the send button Monday to pay the borrowed money back two years early.
Vermont businesses will begin feeling the benefit in January, when their unemployment insurance tax will be reduced $21 per employee.
They’ll also avoid an increase in that tax thanks to the state paying back $54 million to the U.S. Department of Labor, Shumlin said.
“I am extremely pleased to see the state and our employers relieved of these additional costs earlier than anticipated,” the governor said.
“This is another sign of our emerging recovery.”
He cautioned, though, that the state’s unemployment insurance trust fund, currently at about $50 million, is about $110 million short of the $160 million balance at which officials would feel confident in its ability to withstand a future economic downturn.
The tax savings to employers will total about $54 million a year, said Dennis LaBounty, political director of the Vermont AFL-CIO labor federation.
LaBounty expressed disappointment that some of the savings were not being used to restore benefit cuts seen by workers.
As part of a deal to shore up the unemployment fund during the recession in 2010, Vermont’s maximum weekly unemployment benefit was set at $425; some workers previously had received more, depending on their income before the layoff.
Another adjustment designed to achieve savings was that a newly laid-off worker had to wait a week with no income before unemployment benefits kicked in.
“The employer is getting some money back, but the workers aren’t,” LaBounty said.
“We tried during the last legislative session to get some of those benefits back, without any luck,” he said, adding that the effort will continue when lawmakers return in January.
Labor Commissioner Annie Noonan said she, too, expected more conversations during the next legislative session about sharing some of the unemployment trust fund’s improving fortunes with workers.
But she said that after the top priority of paying back what had been a $77.7 million loan from the federal government, the “secondary goal” would be restoring the fund to the $160 million level considered a sufficient hedge against a future economic downturn.
“We don’t want to have to go through this again,” Noonan said.MORE IN Vermont NewsPHILADELPHIA — With his presidential campaign officially over, independent Sen. Full Story
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