EAGLE TRIBUNE: State pressured over $2.1 billion federal loan

By Christian M. Wade, Statehouse Reporter

This piece originally appeared in Eagle Tribune on March 18, 2025.

BOSTON — A pro-business group has launched a campaign to pressure Beacon Hill leaders not to saddle the state’s employers with the cost of repaying a $2.1 billion federal unemployment loan.

The Mass Opportunity Alliance, which includes the Massachusetts High Technology Council, Pioneer Institute, and the Massachusetts Competitive Partnership, rolled out a digital campaign making the case against forcing the state’s employers to cover the loan costs.

“Businesses should not bear the financial burden of repaying a debt they didn’t cause,” the group said. “If the state government broke it, the government should be the ones to fix our state’s UI system.”

The “You Broke It. You Fix It” campaign calls on the Healey administration and legislative leaders to use state funds — not increased employer contributions to the UI fund — to pay off the debt.

Massachusetts shelled out an unprecedented $6 billion in jobless benefits during the pandemic as hundreds of thousands of workers were sidelined by government-imposed shutdowns meant to stop the spread of COVID-19. Laid off workers also received money from federal pandemic unemployment programs.

The state was forced to borrow billions of dollars from the federal government to continue paying benefits, which has driven up insurance rates paid by private employers into the unemployment trust fund.

But a 2022 state comptroller’s report revealed an “accounting error” under former Gov. Charlie Baker’s administration resulted in roughly $2.5 billion being over withdrawn from the federal unemployment fund instead of the state UI trust fund.

In January, the Healey administration announced it had reached a deal with the U.S. Department of Labor to pay off the loan.

Under the agreement, the department has reduced the debt to $2.1 billion and agreed to waive penalties, fees, and back interest if the state pays off the loan over the next 10 years. The Healey administration said the deal will save the state an estimated $1 billion in fees and penalties.

The Healey administration said under the terms of the agreement with the federal agency there will be no impact on businesses “in the short term.”

But in the long-term, unemployment insurance rates will be impacted by efforts to address the solvency of the jobless trust fund, officials said.

Massachusetts businesses are already struggling under some of the highest unemployment insurance tax rates in the nation. The Tax Foundation has ranked the state 47th highest for unemployment insurance tax rates.

“Without a fix to the system, Massachusetts employers will see a tax hike on top of the already high rates they pay,” the alliance said in a statement. “Small businesses — vital to local communities — would be particularly hard hit, forcing difficult choices about hiring, expansion, or even survival.”

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com.