2011 disaster-related unemployment tax relief for business owners
by Mike Eldred
May 30, 2013 | 2497 views | 0 0 comments | 146 146 recommendations | email to a friend | print
DEERFIELD VALLEY- Business owners who laid off workers during one of the state’s three federally-recognized disasters in 2011 may qualify for some relief from their skyrocketing unemployment tax, thanks to legislation sponsored by Rep. Ann Manwaring.

Under Manwaring’s bill, eligible Vermont employers must submit an application for relief through the Vermont Department of Labor’s website (www.labor.vermont.gov.VTSUTADisasterRelief) no later than June 10. Employers without computer access must call the department of labor at (802) 828-4344.

Manwaring says the bill was introduced in response to the tax increases that local employers, like 1836 Country Store owner Al Wurzberger and his wife Sue Wurzberger, who owns the Norton House, began paying after rebuilding their businesses and rehiring employees. Al Wurzberger says he laid off two employees when he had to close down his business for rebuilding after his building was flooded during Tropical Storm Irene. At the time, he recalls, state officials announced that there would be “emergency unemployment” available – and many understood that there would be no tax penalties. “Government officials, a lot of them came by with platitudes, promising that they were going to help,” Wurzberger says. “It was all lies.”

The Wurzbergers, like many employers in the storm-stricken area, thought the layoffs and unemployment would keep money in their employees’ pockets, and give them time to get their businesses up and running. But when they were finally able to get back on their feet and reopen, they felt like the state was trying to knock them down again. “My unemployment tax, for two employees, went from $5 or $6 a week (before the flood), to $50 per week, and as much as $90 per week over Christmas,” Al Wurzberger says. “It may not seem like a lot, but that’s almost $1,000 over 10 weeks. I can’t afford that.”

Wurzberger says his unemployment tax rate went from 0.06% to 6.8% overnight. “If I was in Afghanistan and in the same situation, the government would send me a duffle bag full of $100 bills,” he says. “But it hit me with an excruciating burden, and just when we had spent a half-million dollars out of our own pockets to rebuild.”

Manwaring’s legislation provides up to eight weeks of unemployment tax relief to the employer, but only if the layoffs were directly related to, and immediately followed, one of the three federally declared disasters in 2011.

Before the legislation, there was no disaster relief provision in Vermont’s unemployment statutes. The legislation provides up to four weeks of relief for future disasters, and Manwaring says she thinks legislators will likely act to extend that period for long-term disaster recovery as during the aftermath of Irene.

According to a release from Vermont Department of Labor Commissioner Annie Noonan, “The costs relating to this unemployment insurance relief are estimated to be up to $8.6 million against the unemployment insurance trust fund, which socializes the costs against all employers, whether impacted by the disasters or not. The legislators have taken a prudent and fair approach to the request for assistance from the businesses that were impacted by these disasters,” said Noonan.

Noonan also noted that the state intends to accumulate up to $160 million in its unemployment trust fund to meet federal guidelines. Manwaring explains that Vermont employers have already been paying higher-than-usual unemployment taxes to bring the fund up to the federally mandated level since the state borrowed money from the federal unemployment fund during the peak of the economic downturn around 2009.

Although the unemployment tax relief bill wasn’t difficult to get through the Legislature, Manwaring says the clerical work was tremendously complicated because of the general liability to the trust fund – the relief couldn’t increase the burden on other Vermont employers to build up the trust fund. “The department of labor had to hire about $50,000 worth of temporary workers to do the clerical work, and to contact the people that may be affected,” Manwaring said.

Although eligible businesses will, if they apply, get some relief under the bill, Manwaring says it may not bring unemployment costs back down to pre-flood levels for every business.

The Wurzbergers expect the relief to come in the form of a credit, and Sue Wurzberger says it will be a welcome respite from what they’ve been paying. “It will be a big savings to us,” she said. “I don’t think we’ll be paying the unemployment tax for a year or two.”

Despite the support from other legislators, the bill was passed on the last day of the legislative session – and almost didn’t make it at all. Manwaring notes that, at one point when the bill was in the Senate, she discovered that it had been stripped of the language that had been passed in the House, and new language regarding unemployment benefits for newspaper delivery workers had been inserted in its place. “It scared the devil out of me when I saw that,” she says, noting that another bill she sponsored was also in trouble at the same time. “Everything I worked on all session for folks in my community that was so badly damaged by Irene was going away.”

Manwaring credits Noonan for her efforts to get the bill back on track, in its original form, in the Senate. And Manwaring’s other bill passed, too, as she outlined in a recent column. “The last day was very hairy,” she says.

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