Massachusetts will pay $2.1 billion to the federal government over the next 10 years to settle its debt after the state under former Republican Gov. Charlie Baker mistakenly used federal pandemic funds to supplement unemployment benefits. Must be.
Current Gov. Maura Healey (D) and her representatives on Monday announced details of a settlement reached last week with the outgoing Biden administration that calls for most of the money the state had to pay out due to the error. The money will be repaid, the State House News Service reported. Reported.
In 2023, Mr. Healey announced that the previous administration had improperly used approximately $2.5 billion in federal pandemic relief funds to cover state-funded unemployment benefits.
Healey’s office said the total debt, including fees and interest, was more than $3 billion. Negotiations with the U.S. Department of Labor reduced total debt over the next 10 years to $2.1 billion.
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Massachusetts Governor Maura Healey speaks at Roxbury Community College in Boston, Massachusetts, on Wednesday, January 10, 2024. (Adam Glanzman/Bloomberg via Getty Images)
“I was disappointed to learn early in my term that the previous administration misspent billions of dollars in federal relief funds, potentially costing the state more than $3 billion to repay,” Healey said in a statement. said. on monday.
“Over the past year and a half, we have engaged in extensive negotiations with the U.S. Department of Labor to minimize the impact on Massachusetts residents, businesses and the economy,” she continued. “Today, we have reduced our potential debt by more than $1 billion and negotiated a 10-year payment period to reduce the impact.”
The governor said, “It’s very unfortunate that the previous administration allowed something like this to happen,” but the current administration “takes this opportunity to unite the business and labor communities to improve the unemployment insurance system in a meaningful way.” We are going to make reforms,” he added. . ”
Former Massachusetts Governor Charlie Baker speaks at a Juneteenth commemoration ceremony at Nubian Square in Boston on June 18, 2021. (AP Photo/Elise Amendola, File)
Payments begin on December 1st and continue annually for the next 10 years.
The agreement stipulates that principal payments must come from the Unemployment Insurance (UI) Trust Fund, which is funded by employer taxes and is also used to cover benefits, according to the State House News Service. used. Interest payments are paid from the state’s general fund.
Mr. Healey’s office said businesses will not face increased unemployment insurance payment rates until at least the end of next year, and that rates at that point will depend on reform.
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Massachusetts Governor Maura Healey answers questions from reporters during a press conference in Boston on January 31, 2024. (Stuart Cahill/Media News Group/Boston Herald)
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The governor has vowed to pursue reforms to ease the burden on employers, according to the Statehouse News Service. Employers are already facing increased costs to support increased claims during the pandemic.
Healey directed state Labor Secretary Lauren Jones and Secretary of Administration and Finance Matthew Goshkowitz to “conduct a comprehensive review of UI solvency and evaluate potential reforms.”
The Healey administration predicted that the UI Trust Fund would be hundreds of millions of dollars in debt by the end of 2028, even before taking into account the $2.1 billion in additional payments.
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