State provides tax relief for businesses hit by natural disasters

Gov. Peter Shumlin announced Wednesday that $5 million in unemployment insurance tax relief would help 75 Vermont businesses forced to lay off about 300 workers when their operations slowed — or came to a screeching halt — after the storms and flooding of 2011. Companies affected by future natural disasters can receive credit for up to four weeks of unemployment insurance taxes. Photo by Hilary Niles/VTDigger

Gov. Peter Shumlin announced Wednesday that $5 million in unemployment insurance tax relief would help 75 Vermont businesses forced to lay off about 300 workers when their operations slowed — or came to a screeching halt — after the storms and flooding of 2011. Companies affected by future natural disasters can receive credit for up to four weeks of unemployment insurance taxes. Photo by Hilary Niles/VTDigger

The long wake from flooding in 2011 was eased a bit Wednesday for 75 businesses that laid off about 300 employees after Tropical Storm Irene and other major storms two years ago.

The unemployment insurance bills for these businesses will be credited for as much as eight weeks of tax relief. Half as much credit is now available to employers affected by natural disasters in the future.

“We recognized that businesses already struggling to recover from these natural disasters were facing added unemployment expenses,” Gov. Peter Shumlin said in a news release.

Flanked by eight legislators, two businesses owners and Jim Harrison of the Vermont Grocers’ Association, Shumlin praised lawmakers and Department of Labor staff first for passing H.169, then for implementing it quickly.

The money for the credits, totaling approximately $5 million, will be taken from the state’s Unemployment Insurance Trust Fund — the account from which unemployment benefits are paid.

The pricetag is down $3 million from the worst-case scenario: that all layoffs between April and October 2011, had been spurred by the floods, according to Labor Commissioner Annie Noonan. Not all of them were, so the actual cost is less than what the state was prepared to pay.

Shumlin said businesses will receive from $3,000 to $15,000 of credit on their next unemployment insurance bills.

Issued quarterly, the charges are based on each business’ employment history — including its cycle of hiring and firing. Generally, the more layoffs an employer issues, the higher its unemployment insurance rate climbs.

Seasonal businesses, therefore, might be accustomed to paying more, Harrison said. But most grocery stores that comprise his organization’s membership employ a more consistent payroll throughout the year. The spiked unemployment insurance bills took them off-guard.

Harrison ultimately helped connect those business owners with legislators, with whom they shared their double tales of woe: struggling to recover from floods, only to be sidelined by higher unemployment insurance bills.

“It was like a tax,” many said Wednesday, but for a natural disaster beyond anyone’s control.

Sen. Richard McCormack, D-Windsor, said those stories were key to convincing the Senate Finance Committee that the situation merited tapping into the fragile Unemployment Insurance Trust Fund.

Some argued that the fund was too delicate to touch for this purpose. Others wanted to offer more than eight weeks of relief to businesses, some of which had closed for several months. Still others thought the laid-off workers themselves should receive more compensation, rather than the businesses that couldn’t keep them employed, according to previous reporting by VTDigger.

“This is a partial victory,” McCormack said, acknowledging that it did not compensate businesses for 100 percent of their hardship from the floods. “But it’s enough to seriously mitigate their loss, and establish a precedent for the future,” he said.

Al and Sue Wurzberger of Wilmington attended Wednesday’s news conference to join in celebration of the tax relief they’ll both receive for their businesses.

Sue Wurzberger owns the quilting shop Norton House, and her husband owns the 1836 Country Store. Much of Sue’s fabric was ruined in the floodwaters, while Al lost untold pounds of cheese, candies and some of his candy-making equipment.

They refinanced immediately after the flood through the Vermont Economic Development Authority, using their 1965 deed and what little was left of their business as collateral for the loan. Al estimated the couple incurred a half-million dollars in damages for their two businesses combined.

With the unemployment insurance relief, Sue plans to bring her two or three employees back to their full schedule of 32 to 40 hours per week. Al thinks he can hire a third employee to work three days per week. Neither business is back up to the crew size it had before the storms, but both owners said they are grateful for a reprieve and the chance it affords to continue rebuilding their businesses.

The mood among lawmakers was more elated than relieved: They were happy to be able to offer at least some help without harming the Unemployment Insurance Trust Fund. And they’re satisfied that they wrote permanent, although incremental, assistance into state law for future businesses temporarily shuttered by an “act of God.”

Unemployment ranks are projected to surge with the recent IBM layoffs and forthcoming Energizer plant closing, and President Barack Obama just declared another federal disaster in Chittenden, Essex and Lamoille counties on June 13.

 

Follow Hilary on Twitter @nilesmedia

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Comments

  1. This relief is good. Where is the relief for Vermont Property owners, hit with flood of recession, hardships, salary stagnation, receding property values, complex system, local control of statewide tax. It has been a flood of hardship. When I tried to get Vermont property tax abatement, the town did not care about me. Monkton,Vermont now holding a tax sale for being 6 months late. Relief should be about all disasters in people’s lives.

    • Jim Barrett :

      Didn’t Monkton get approved for a gift from the Vermont taxpayers for $100,000.00 to build a salamander crossing?

  2. Jim Barrett :

    The state budget is based on recessionary numbers and will be taking in huge amounts of money for the politicians to spend. Furthermore, businesses do pay taxes and they then pass that tax onto the public. This form of taxation is designed to make people think businesses are paying taxes when in fact the taxes are passed down to the consumer. The monies that are being GIVEN to these businesses is your tax dollars and is allocated by politicians and in many cases the trail leads to those who are heavy givers of political donations.

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