Vt. employers face new federal tax after state fails to pay bill - WCAX.COM Local Vermont News, Weather and Sports-

Vt. employers face new federal tax after state fails to pay bill

Posted: Updated:
MONTPELIER, Vt. -

At Myers Containers they deal in trash, recycling and the bottom line.

"This business is growing," said Joe Sinagra of Myers.

The family owned business best known for its red cans has 45 employees.

"Every dollar counts," Sinagra said. "We are working on small margins."

Those margins are getting smaller. All employers will soon be paying more to do business in Vermont.

Let's rewind. During the economic downturn almost three years ago, the fund that pays the unemployed went bankrupt-- too many people collecting; not enough money coming in. So state leaders made a deal, cutting some worker benefits and increasing taxes employers paid into the fund. The state also borrowed almost $78 million from the federal government with one condition-- the money had to be paid back in two years. Gov. Peter Shumlin was the Senate leader who helped negotiate the deal.

"There is going to be some pain for everybody; not everybody is going to like the solution," Shumlin said in May 2010.

And now that state debt is past due. The federal government is hitting employers with a penalty: $21 an employee. The state estimates there are 304,000 workers, so the tax adds up to about $6.4 million.

We wanted to talk to Shumlin, but were told he was unavailable because he was traveling for the inauguration.

Reporter Kristin Carlson: Do you think employers should be surprised about this tax coming?

Vt. Labor Commissioner Annie Noonan: No, we've been telling employers about it. I think some forgot about it.

Noonan says the state considered options to pay back the feds on time, sparing employers the $21 tax penalty, but decided against it. The state did not want to bond because of unknown costs with Tropical Storm Irene and officials also ruled out state money because they were worried about a budget deficit.

Noonan says the unemployment fund is back in the black and the state has taken $20 million out to repay part of the federal loan. The state is set to make another $20 million payment soon. The goal-- pay back the final $38 million this year or next.

Kristin Carlson: Is now a good time for employers to be having to pay this tax?

Annie Noonan: I don't think it's a very a good time for employers to have to pay a tax, but it is what it is.

--------------------

Kristin Carlson: Do you think the state should have been more proactive at finding some other solution to this?

Joe Sinagra: Absolutely.

For Myers, the tax will cost about $945. If the state takes another year to pay back the federal loan, the tax against employers will double.

"Twenty-one dollars by itself isn't the end of the world, but $21 on top of everything else with the potential of being $42-- that's when it starts to make it harder to do business," Sinagra said.

The state says it has worked to let employers know about this tax penalty. But many employers I talked to say when the deal was struck several years ago, they knew they would have to pay more into the fund, but did not realize they would bear the additional brunt of a federal tax penalty because of the state's late payment.

Let's look at the numbers that made the unemployment fund bankrupt. At the height of the recession, three times as much money was being paid out as now-- $6 million was going to 20,000 people. Now, about $2.5 million is going to 8,000 people who are unemployed.

State officials say in addition to changes made several years ago to shore up the fund, they have also hired a full-time person to make sure laid off workers are meeting the requirements to collect from the fund, cutting down on fraud. But Noonan says even so, with another steep downturn the state could be back in the same position.

  • Local NewsMore>>

  • Officer involved shooting in Bennington Police Dept.

    Officer involved shooting in Bennington Police Dept.

    Wednesday, April 23 2014 12:22 AM EDT2014-04-23 04:22:02 GMT
    Police say there has been an officer involved shooting inside the Bennington Police Department. It happened just before 9 Tuesday evening. Authorities are releasing very few details. But say the Bennington Police Chief has called in the Vermont State Police to investigate after an officer allegedly shot a man in the lobby of the police station. No word yet on what prompted the shooting. The injured man was taken to a hospital. Police would not comment on the severity of his injuries. Initial ...More >>
    Police say there has been an officer involved shooting inside the Bennington Police Department. It happened just before 9 Tuesday evening. Authorities are releasing very few details. But say the Bennington Police Chief has called in the Vermont State Police to investigate after an officer allegedly shot a man in the lobby of the police station. No word yet on what prompted the shooting. The injured man was taken to a hospital. Police would not comment on the severity of his injuries. Initial ...More >>
  • Champlain College housing plans put on hold

    Champlain College housing plans put on hold

    Wednesday, April 23 2014 12:22 AM EDT2014-04-23 04:22:42 GMT
    It's a fight that's pitting Champlain College against the Queen City. The school says it's not giving up on building more student housing, even after being denied land-use permits. Years ago, the college made a commitment to create housing for all students but that goal has hit a snag, with their recent construction plans on hold.The project would create more than 300 beds for Champlain students on St. Paul Street, but the Development Review Board denied the permits the college needed based o...More >>
    It's a fight that's pitting Champlain College against the Queen City. The school says it's not giving up on building more student housing, even after being denied land-use permits. Years ago, the college made a commitment to create housing for all students but that goal has hit a snag, with their recent construction plans on hold.The project would create more than 300 beds for Champlain students on St. Paul Street, but the Development Review Board denied the permits the college needed based o...More >>
  • Burlington school budget on it's way back to voters

    Burlington school budget on it's way back to voters

    Tuesday, April 22 2014 11:56 PM EDT2014-04-23 03:56:59 GMT
    A new Burlington school budget is on its way to voters that is more expensive and has more cuts than the last version.The board of finance approved a $67.6 million budget. On Town Meeting Day voters shot down a budget that was about a million dollars less than this new budget. After a recent audit that uncovered a $2.5 million dollar deficit, the board was forced to slash $2.5 million in programming and staff. School board chair Patrick Halladay acknowledges concerns about a larger budget wit...More >>
    A new Burlington school budget is on its way to voters that is more expensive and has more cuts than the last version.The board of finance approved a $67.6 million budget. On Town Meeting Day voters shot down a budget that was about a million dollars less than this new budget. After a recent audit that uncovered a $2.5 million dollar deficit, the board was forced to slash $2.5 million in programming and staff. School board chair Patrick Halladay acknowledges concerns about a larger budget wit...More >>
  • Amphibians on the move

    Amphibians on the move

    Wednesday, April 23 2014 12:23 AM EDT2014-04-23 04:23:09 GMT
    People across the state are helping out their amphibian friends on the move. Biologists say this annual salamander crawl happens on the first warm rainy nights of spring like Tuesday night. Over half a dozen of different critters from frogs to spotted salamanders travel to breeding grounds. But often, experts say, that means crossing busy roads which can be deadly for a large number of amphibians. But groups on Pond Road in Shelburne, are giving a helping hand to get the salamanders safely ac...More >>
    People across the state are helping out their amphibian friends on the move. Biologists say this annual salamander crawl happens on the first warm rainy nights of spring like Tuesday night. Over half a dozen of different critters from frogs to spotted salamanders travel to breeding grounds. But often, experts say, that means crossing busy roads which can be deadly for a large number of amphibians. But groups on Pond Road in Shelburne, are giving a helping hand to get the salamanders safely ac...More >>
  • Vermont man accused of identity theft

    Vermont man accused of identity theft

    Wednesday, April 23 2014 12:23 AM EDT2014-04-23 04:23:34 GMT
    A Vermont man is accused of using stolen identities in a scheme to defraud banks now faces federal charges. Prosecutors say 35-year-old Brian Wyer used identities of Ohio and Kansas residents to obtain two Vermont non-driver ID cards. He then allegedly used the fraudulent IDs to open bank accounts in Massachusetts withdrawing about $75,000. Wyer was indicted in Vermont in June and taken into custody by U.S. marshals in Illinois last month. During his arraignment Monday in Burlington the judge...More >>
    A Vermont man is accused of using stolen identities in a scheme to defraud banks now faces federal charges. Prosecutors say 35-year-old Brian Wyer used identities of Ohio and Kansas residents to obtain two Vermont non-driver ID cards. He then allegedly used the fraudulent IDs to open bank accounts in Massachusetts withdrawing about $75,000. Wyer was indicted in Vermont in June and taken into custody by U.S. marshals in Illinois last month. During his arraignment Monday in Burlington the judge...More >>
  • Rutland vandals target parking meters

    Rutland vandals target parking meters

    Wednesday, April 23 2014 12:23 AM EDT2014-04-23 04:23:55 GMT
    Police say vandals in Rutland targeted several parking meters in a quest for quick cash. 11 meter locks and 12 meter cans filled with change were damaged along Merchants Row, Center Street, Court Street, Cottage Street and Justice Square parking lot. One meter pole and its vault was also destroyed. Police put damage in excess of thousand bucks. Anyone with information is asked to call Rutland City police.More >>
    Police say vandals in Rutland targeted several parking meters in a quest for quick cash. 11 meter locks and 12 meter cans filled with change were damaged along Merchants Row, Center Street, Court Street, Cottage Street and Justice Square parking lot. One meter pole and its vault was also destroyed. Police put damage in excess of thousand bucks. Anyone with information is asked to call Rutland City police.More >>
  • Vt. principal who faced criminal charges wants clearer mandatory reporting law

    Vt. principal who faced criminal charges wants clearer mandatory reporting law

    Tuesday, April 22 2014 6:53 PM EDT2014-04-22 22:53:40 GMT
    A law designed to protect kids landed a Vermont school principal in hot water. Now, Danville High School Principal Noah Noyes wants lawmakers to put the state's mandatory reporting rules under the microscope.More >>
    A law designed to protect kids landed a Vermont school principal in hot water. Now, Danville High School Principal Noah Noyes wants lawmakers to put the state's mandatory reporting rules under the microscope.More >>
  • Embezzlement case prompts changes from Vt. officials

    Embezzlement case prompts changes from Vt. officials

    Tuesday, April 22 2014 7:39 PM EDT2014-04-22 23:39:01 GMT
    The case of a Vermont worker charged with embezzling taxpayer money is prompting changes in the state's system.More >>
    The case of a Vermont worker charged with embezzling taxpayer money is prompting changes in the state's system.More >>
Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WCAX. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.