You may or may not be familiar with HR.169 and S.90, a house and
senate bill regarding Unemployment Insurance tax increases that
businesses are now responsible for after the Irene flooding in
2011. It is important because there are serious shortcomings
of this legislation that may seriously affect you and/or your
community. The bills allow for businesses to apply for only
eight weeks of relief for the events from 2011 and a mere four
weeks for future events.
While we are ever grateful to Alison Clarkson and Dick McCormick
who worked hard to get some form of legislation written to help
businesses, their outstanding efforts fell short.
The reality of Irene continues to impact our businesses
throughout the state.
Here at Woodstock Farmers' Market (WFM) we face many continuing
expenses: our machines were fixed minimally due to lack of funds at
the time; and they are now breaking down. Drainage issues on
the property were fixed this spring due to bank repair and flood
damage. We have a myriad of loans we will need to pay back
over the next few years both from the State and from
customers. And, since last July, due to the fact that we laid
off our staff for 12 weeks after Irene devastated our store, the
State seemed compelled to count that as regular unemployment
pushing our UI rating that was just 1.1 before Irene (the lowest a
business could have) to 6.4. That impact has meant each
quarter we are paying the state an additional $10,000 in
unemployment taxes. All this help up by an economy that is still
OK. We get it. The state is broke.
Soda taxes, water taxes, gas taxes and all the other taxes that
were pending in Montpelier were designed to spread the
hurt. But jeez, higher business taxes because an act of
God? WFM has been dutifully paying UI insurance to the state
for over 20 years. To boot, what we've paid in over that 20
year period is a far cry from the 12-week payout during Irene.
The Senate Bill proposes eight weeks of relief. That means
we are still responsible for four weeks (we were closed for 12);
that four weeks is now tacked onto our new UI rating for the next
three years. Basically we are helping to fund the shortfall-in
a recovery mode-while a business up the street affected by Irene
for, say three weeks, continues to pay their rightful UI rating
based on their real unemployment situation, not including their
Is this good policy?
Further, there are no funding mechanisms in the bill to pay for
the proposed eight weeks of relief, but rather the language is
crafted such that businesses have to apply for it. Boy, a
bitter pill to swallow and more bureaucracy. I cannot tell you
how much that stinks. We need the cash now as we are still in
The outlay of cash continues for all of us employers who had
their rating changed. Since last July 1 when the rating
changed, The Woodstock Farmers' Market has incurred over $32,000 in
additional expense! That is more than our budgeted net profit for
the year as we continue in recovery mode.
But what's even most curious and off-putting is that both the
Senate and House solutions provide little relief for future
events. Both bills put a four-week maximum on any UI relief in
the event of future disasters. In other words, if a business
were forced to lay folks off for 20-weeks due to extreme storm
damage, they will only be "covered" for four of those weeks-plus
would have their UI rating skyrocket, having to absorb the other 16
weeks for three years, a similar situation to WFM
now. And another employer - up the street perhaps, with less
damage that only closed four weeks gets full coverage and no UI
It seems a bit unconstitutional, if I may be so bold, and it is
punitive to those who suffered the most.
Just to be clear, it is worth examining other states affected by
federally declared disasters. I found that most states have no
minimum or a cap on UI relief. Businesses that opened back up
went right back to their regularly calculated UI rating without the
staff laid off being "added" into their rating.
We believe a forward-thinking approach for future events would
have been the following: To raise everyone's UI rating a small
amount, (say 1/10 of one percent) so that everyone was paying more
into the pool now. The percentage could be readily calculated
using Department of Labor wage numbers. This increase could be
used to pay for the expense (that we suppose the Legislature is
pulling from the general fund) now and for the future federally
declared disasters. Every business in the state has some stake
in this as a disaster can strike anyone. Instead, when that
future calamity occurs, the legislature will be scrambling to find
the dollars to pay for it.
Everyone understands there is likely to be another federally
declared disaster at some point. Maybe even this
year. Businesses will close and people will be laid
off. We feel that this entire debate will start all over again
as businesses that don't open within four weeks will suddenly see
their UI ratings go up and their tax dollars rise.
Shame on Montpelier for not dealing with this issue in a more
equal and common sense way now, when the iron was hot.