NH Gov. Chris Sununu has vetoed a bill that would have prevented the state from collecting interest on overpayments of unemployment compensation.

“Without the accrual of interest, individuals do not have an incentive to pay these funds back,” the governor said in his veto message. “In other words, this bill would allow ineligible beneficiaries to get an interest-free loan on the backs of New Hampshire employers.”

The state is attempting to recoup $6 million in overpayments incurred between 2017 and 2022.

Employers largely fund the unemployment system, and the state needs to be accountable for the money paid out in benefits, the governor said.

Under the bill, the state still would have been allowed to charge interest to unemployment compensation recipients who intentionally committed fraud.

Sen. Becky Whitley, D-Hopkinton, strongly objected to the veto.

“It is appalling that the governor has chosen to veto such a bipartisan and vital piece of legislation that would have helped so many Granite Staters during an incredibly trying time in their lives,” she said in a prepared statement.

The NH Senate passed Senate Bill 42 on a voice vote on Feb. 9, and the House passed it 196-178 on June 8.

Richard Lavers, deputy commissioner of NH Employment Security, said present law allows the state to eventually charge 1 percent interest monthly on owed principal. Most of the outstanding overpayment money was accrued early in the pandemic when unemployment compensation claims spiked, Lavers said.

— RICK GREEN/THE KEENE SENTINEL