CONTRIBUTORS

Saving our small businesses from a bleak winter

State Rep. Torren Ecker
R-Adams/Cumberland

The roller coaster economy our small businesses have endured started with mandated economic shutdowns and has been slow to recover. When Gov. Tom Wolf closed nearly every business during the early days of the COVID-19 pandemic, Pennsylvania went from collecting a steady stream of revenue, including unemployment insurance payments, to draining its unemployment compensation reserves and being forced to rely on federal loans to meet its obligations to unemployed residents. Now our small businesses could be left holding the bag if the General Assembly does not act.

States across the nation paid out almost as much in benefits from the start of COVID-19 as they did throughout the rest of the 21st century combined. To help cover the cost of this substantial obligation to unemployed workers, the commonwealth received nearly a billion-dollar loan from the federal government. Alarmingly, a large part of this loan comes due this November.

Under state law, most employers are required to pay the state an unemployment insurance premium and/or tax to fund the unemployment compensation fund. As a result, local businesses will be subject to significantly higher unemployment insurance premiums and taxes to cover the cost of the debt. Small businesses could be on the hook for the $700 million debt in the state’s Unemployment Compensation Trust Fund that is owed the federal government by November 2022.

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Jim DeLisio, president of the York County Tavern Association, speaks during a press conference at the recently-closed Vito's Pizza and Beer Thursday, Oct. 29, 2020. DeLisio called for easing of restrictions imposed on eateries due to the COVID-19 pandemic. Bill Kalina photo

Should the Legislature not take the lead on fixing this issue, small businesses, the lifeblood of our communities, will face huge increases in unemployment insurance premiums at a time when they are just beginning to recover from the closures and battling record inflation. Higher rates would have a direct impact on businesses’ ability to hire new employees and to grow.

The commonwealth is currently sitting on $2 billion in mostly unrestricted American Rescue Plan Act (ARPA) funding, intended to give our state flexible funds to address unexpected and disastrous economic consequences of the pandemic. I have fought to preserve these rescue funds as these funds are precisely what should be used for the Unemployment Compensation Trust Fund crisis.

Time is of the essence. Businesses will receive their 2022 Unemployment Insurance rates in December, leaving only months for the Legislature to move quickly to save our small businesses.

The General Assembly must act now to save our small businesses and fortify our economy from further negative impacts. As a strong small business advocate, I support using the federal stimulus funding to solve the unemployment compensation crisis. As a member of the House Appropriations Committee and the Labor and Industry Committee, I have used my voice to encourage my colleagues and leadership to make this a priority. There is no more appropriate use of these funds than protecting our already struggling businesses from higher taxes brought on by the pandemic. Our small businesses have suffered long enough, and I intend to fight to ensure their continued prosperity.