BOSTON — Employers could be hit with hefty increases in mandatory payments to the state’s unemployment insurance system this year after lawmakers failed to approve Gov. Charlie Baker’s proposed freeze on higher rates.

Baker sought to ease the blow of planned increases over the next two years. Lawmakers considered his proposal in the final hours of the two-year legislative session on Wednesday but the measure didn't come up for a vote.

In order to take effect, a freeze would have to be re-filed in the new legislative session that gets underway this week.

"Unfortunately it didn't make it across the finish line," said Chris Carlozzi, state president of the National Federation of Independent Businesses, one of several groups pushing for the freeze. "We hope the Legislature prioritizes this early in the next session."

Carlozzi noted that employers still have a few months before the first bills with higher rates are due in March. But uncertainty over rates could hurt employers and hinder the state's recovery in the meantime, he said.

"If businesses are under the impression there's going to be a massive increase in unemployment insurance taxes, it's to be very difficult for them to retain or hire new workers," he said.

Like most states, Massachusetts has seen a crush of jobless claims amid the coronavirus pandemic.

A multi-billion-dollar deficit in the state's unemployment trust fund is expected to drive up rates paid by employers by an average of 60%. The employer's annual share is projected to rise from an average of $539 per employee to $858 this year, according to the state Labor Department.

The employer contribution will rise to $925 over the next four years, the agency said.

Massachusetts' unemployment rate dropped to 6.7% in November but tens of thousands of workers remain idle amid ongoing economic fallout of the pandemic. The unemployment trust fund, which pays for jobless benefits, is expected to be more than $5 billion in the hole by the end of this year.

Baker's proposal would have frozen unemployment insurance rate increases for the next two years, bringing down this year's planned increase to an average of 17%.

The plan would have authorized the state to issue bonds to pay off federal borrowing needed to supplement the fund. Baker said a freeze would ease the burden on employers while ensuring the state has access to more federal funds to keep benefits flowing to jobless workers.

Associated Industries of Massachusetts, a pro-business group representing some of the state's largest employers, posted an op-ed on Wednesday urging Baker and lawmakers to revisit the issue this year to avoid a "potentially disastrous" rate hike.

Jon Hurst, president of the Retailers Association of Massachusetts, said business owners shouldn't be saddled with higher unemployment insurance costs when it's "no fault of their own" that workers are unemployed.

"It was largely government shutdowns, restrictions and messaging that led to these layoffs," he said. "So it's a legitimate question whether employers alone should have to repay billions of dollars in borrowing to fix the problem."

Christian M. Wade covers the Massachusetts Statehouse for The Salem News and its sister newspapers and websites. Email him at cwade@cnhi.com.

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