Leadership isn’t easy in times of prosperity; leading through an unprecedented pandemic is arguably tough.
I get it, things don’t always go as planned in challenging times like this. But it’s irresponsible to hardworking Coloradans to not deal with our skyrocketing unemployment crisis.
Things are not going as planned here in Colorado. We are having a tough time recovering from COVID and getting our neighbors back to work. So tough that our governor and legislature are PAYING people $1,600 to go back to work, after paying them more than they made at work to stay at home.
And that’s after emptying the coffers of unemployment benefits for the state, and borrowing billions from the federal government.
There are still nearly 163,000 Coloradans receiving unemployment benefits as of the week of May 1, and the state’s unemployment rate has remained about flat for three straight months at 6.4%.
As a CEO of a young company, and a regent at the state’s third-largest employer, I can attest to how hard it is to find employees right now, especially when they are getting an extra $300 per week in unemployment benefits.
The incentives are upside down thanks to our politicians’ “help.”
You know what Ronald Reagan said about that: “The nine most terrifying words in the English language are, ‘I’m from the government, and I’m here to help.’ ”
More help came in a $3.9 billion federal windfall to our state this week. Our Colorado politicians allocated ZERO, yes ZERO, dollars toward replenishing the Unemployment Insurance Trust Fund that has been depleted by COVID.
Remember, the economy is cyclical, and we should be planning (and saving) for the next economic downturn. Last March Colorado had more than $1.8 billion in the UI Trust Fund.
The entire dynamic around this is pretty staggering, as this is one of the clearest issues directly impacted from the pandemic and public health orders. Businesses were initially forced to close doors, lose customers, lose employees, lose revenue, and now will be forced to pick up the tab to replenish the UI Fund over $1 billion in the hole.
That’s right. This will be a massive tax on the backs of already struggling small businesses, and surcharges and increases in UI taxes will begin to escalate next year, almost tripling costs to employers passed last session.
The UI Trust Fund was a lifeline to the many in the public that the government directly relied on and benefited from, and yet with the billions of dollars in federal aid the state has made zero attempts to shore up an insolvent program.
I dealt with the same battle at the University of Colorado in the last year. We drained our reserves as we struggled to maintain the status quo during COVID. We’ve fought hard to build those reserves over the years.
Instead of making tough lasting cuts and helping students by lowering tuition in response, CU used temporary furloughs and tapped into our reserves to get through the storm. The right thing to do now is to use the stimulus dollars to replenish those reserves. The same can be said for our state’s UI Trust Fund.
Colorado, alongside states like California, New York, and Connecticut, has one of the country’s highest burdens of federal loans to its UITF. Colorado is one of only 19 states currently reliant upon federal loans. It’s over $1 billion in federal loans as of March this year, which is $174 per every man, woman and child in the state.
To make matters worse, Colorado’s UI Trust Fund management has been a disaster; 1.2 million fraudulent claims for benefits have been filed through the state’s unemployment system. Before the pandemic, the state had fewer than 100 fraudulent claims a year.
Investigative reporting has found that the state has paid out over $60 million in fraudulent claims. $60 million of taxpayer’s money. Why isn’t anyone getting fired over this?
The Colorado Legislative Council estimates tax revenue will have to increase an average of 25% a year for next two years just to shore up the fund and make it solvent.
The higher taxes will fall on the businesses hit the hardest. The way the premium works, it actually charges a higher rate for companies that have laid off a higher percentage of their workers. So, companies that are trying to bring back the greatest number of workers, or retain new hires, will have the highest costs.
Way to strike at the heart of every small business, Colorado politicians. That means jobs going away, businesses shuttering, livelihoods gone.
How do we prevent this?
Let’s take some lessons from other governors across the nation — use some of the $3.8 billion stimulus money or even some of the excess state revenue to fill back up those coffers so job creators won’t be taxed. It’s the right thing to do — for our state. For the people of Colorado.
Heidi Ganahl is a businesswoman, entrepreneur, author and at-large member of the University of Colorado Board of Regents, to which she was elected as a Republican in 2016.