Well, folks, Massachusetts just got hit with a $2.1 billion bill from the federal government, and you can thank some creative accounting during former GOP Governor Charlie Baker’s administration for that. Turns out, instead of using state funds to cover unemployment benefits, Baker’s team dipped into federal pandemic relief money — money that wasn’t meant for that purpose. Oops. Now, under Democratic Governor Maura Healey, the state has to clean up the mess and repay Uncle Sam over the next decade.
Let’s break it down. Healey’s administration uncovered that about $2.5 billion in federal pandemic relief funds had been improperly used to prop up unemployment benefits that should have been funded through the state’s Unemployment Insurance (UI) Trust Fund. Add penalties and interest, and the total liability ballooned to over $3 billion. But after some “extensive negotiations” with Biden’s Department of Labor, Healey’s team managed to knock the bill down to $2.1 billion — not exactly pocket change, but at least it’s a billion-dollar discount.
Now, let’s talk about how Massachusetts plans to pay this tab. Most of the repayment will come from the already struggling UI Trust Fund, which is funded by employer taxes. Businesses were hit hard during the pandemic, and their unemployment insurance rates already rose to keep the system afloat.
Meanwhile, interest payments on the debt will come from the state’s General Fund — which is, of course, taxpayer money. In other words, whether you’re an employer or a resident, the cost of this mistake is coming out of your pocket one way or another.
Governor Healey was quick to point fingers, blaming the Baker administration for the mishap. “Incredibly frustrating,” she called it. Sure, but frustration won’t pay the bills. The truth is that Massachusetts businesses and workers are now left holding the bag, with payments starting December 1 and continuing for the next ten years.
And it gets worse: the UI Trust Fund is already projected to be hundreds of millions of dollars in debt by 2028 without factoring in these new payments. If you’re a Massachusetts employer, it’s safe to say you’re not thrilled about what this means for future UI rates.
Healey says she’s committed to reforming the unemployment insurance system to “soften the burden” on employers, but how many times have we heard that line before? Let’s not forget, the same government that botched federal relief funds now wants us to believe it has the answers to fix the system.
Healey directed her labor and finance chiefs to conduct a “comprehensive review” of the UI system’s solvency, which sounds like bureaucratic speak for “we’re not sure what to do yet.”
Here’s the kicker: this isn’t just about bad bookkeeping. It’s about the broader problem of government incompetence and lack of accountability. Businesses are already drowning in inflation-driven costs, and now they’re being told they might face even higher taxes to cover a debt they didn’t cause. Meanwhile, residents will see state funds diverted to pay interest on a bill that never should’ve existed.
