A plan by Gov. Jared Polis to infuse Colorado’s unemployment insurance fund with more than $600 million could generate nearly equal savings for businesses in the state, according to a new report.
The report by the Common Sense Institute (CSI), a free-enterprise think tank, found that the governor’s proposed investment could return savings of more than $560 million for businesses over the next six years.
Colorado business owners are on the hook for more than $5.3 billion in state and federal unemployment insurance payroll taxes from 2023 to 2027, with more than $73 million resulting from fraudulent claims, the report said.
“The impacts of this tax are tremendous, and though necessary to rebuild our unemployment insurance system, they will slow the efforts to revive our economy,” said Chris Brown, CSI’s vice president of research. “Simply put, replenishing the trust fund will reduce taxes and preserve jobs.”
During the pandemic, Colorado’s unemployment system faced a record-high claim volume, which quickly set the state’s Unemployment Insurance Trust Fund, from which unemployment claims are paid, towards insolvency.
The report said that as of July 2021, the fund’s balance is more than $1 billion in the red and is not projected to become solvent until 2024 without assistance.
While the $600 million investment seems like a drop in the hat in comparison, CSI’s modeling shows that it would cancel out the solvency surcharge after two years and return the fund’s reserves to a stable level.
The investment could also save more than 4,700 jobs in the process compared to the baseline projections, CSI said.
This article was originally posted on Governor’s unemployment insurance fund proposal could save Colorado employers over $560M