Shawn Shouldice is Vermont state director of the National Federation of Independent Business, and Richard Wobby, is executive vice president of Associated General Contractors of Vermont.

An open letter to members of the Vermont Senate: On behalf of NFIB and AGC/VT members in Vermont, we are writing to express our opposition to S.10, legislation that was intended to hold harmless small businesses from the historic event — pandemic unemployment in the magnitude of $1 billon.

NFIB went on record in the Senate Economic Development Committee on Feb. 2, supporting legislation as introduced because it provided relief of charges from March 15 to Dec. 31, 2020. Going into this historic pandemic the Vermont Unemployment Trust Fund was overfinanced, so providing small businesses protection from a cost shockcertainly would have been appreciated.

However, S.10 as passed out of the Senate Economic Development Committee will cost Vermont small business owners $47 to 56 million.

The bill:

Increases unemployment benefits by 20%, which will add $35 million in costs to small business owners. This only makes it harder to encourage workers to come back into the workforce.

Creates a new benefit for dependent coverage that will cost an estimated $12 million to $21 million in costs — a significant change passed in the 11th hour without any testimony.

Here are some key facts for your consideration:

The unemployment insurance tax is paid by employers (not employees). Employers pay into Vermont’s unemployment insurance fund based on four variables: experience rating, tax rate schedules (currently set at schedule-1), taxable wage base and benefit ratio.

Employers are not responsible for the increased use in 2020; rather, it came as a direct result of government orders to close or restrict business activity.

Providing relief in the bill as introduced from this historic period of use of the fund is not a gift (or a “business handout”); it is simply adjusting it at a slower rate (businesses will still have to pay for the $1 billion in benefits paid out in 2020).

Vermont was more fortunate than most states, as our fund was overfinanced going into 2020, so although we have a financial hole to dig out of to ensure solvency of the unemployment insurance fund, S.10 proposes to dig a deeper hole.

What adds to the shock of the committee’s action on S.10 is that, just days ago, the federal government announced a Covid relief package that will generously provide Vermont with more than $2.7 billion in federal aid because of its small-state status. Prior to the pandemic, small businesses provided 157,322 jobs in Vermont, more than 60% of the state’s workforce, according to the U.S. Small Business Administration. Companies with fewer than 20 employees created the largest percentage of new jobs. They may be small, but side by side they are an economic powerhouse.

Your focus on fulfilling critical needs to help Vermont’s job creators emerge from this historic economic crisis is paramount. Cost shocks and long-term cost impacts that will result from the passage of S.10 as passed by the committee will hurt already struggling Vermont businesses. Passing legislation that will cost Vermont’s small businesses in excess of $50 million at a time when the federal government is about to release $2.7 billion in Covid recovery support makes no sense.

Shawn Shouldice is Vermont state director of the National Federation of Independent Business, and Richard Wobby, is executive vice president of Associated General Contractors of Vermont.

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