New York Saddles With $ 9 Billion Unemployment Debt | New
ALBANY (TNS) – The New York Unemployment Insurance Trust Fund has about $ 9 billion in debt, more than double what the state took four years to repay after the Great Recession took end in 2009.
The state comptroller’s office has offered a detailed plan on how to settle the historic debt to the federal government, but other state officials have been hesitant to offer specific thoughts on an important issue lawmakers will need to address. tackle in the coming months.
Ultimately, the decision will be up to Governor Kathy Hochul and the state legislature to try to limit the rise in unemployment insurance rates that business owners may have to pay as the state tries. to pay off billions of dollars in debt.
Democratic leaders in both the Assembly and the Senate did not respond to requests for comment on plans to tackle unemployment debt. The issue will inevitably become a key issue for Senate Majority Leader Andrea Stewart-Cousins ââand Assembly Leader Carl E. Heastie to address in upcoming budget negotiations, as the state has $ 5 billion. excess income from the US bailout that could be used to offset debt.
Hochul, who has a budget cycle ahead of facing his first gubernatorial campaign next year, bypassed by offering a tough stance on the issue. His administration addressed questions about the Unemployment Insurance Trust Fund to the state Ministry of Labor, which falls under the Hochul administration.
In the aftermath of the recession in 2013, the state capped the amount employers could be liable for, a point the Labor Department highlights as useful in preventing further damage to small businesses.
“We also call on our federal partners to cancel the loan entirely given the historic nature of the economic downturn that has affected every state, or at least to write off the interest on the loan,” said Deanna Cohen, spokesperson for the Ministry of Labour. A declaration.
The total amount of contributions New York had accumulated in its fund, $ 2.65 billion in January 2020, its highest figure on record, was still well below the recommendation of the US Department of Labor.
He let New York’s unemployment fund go into the pandemic as having the second most insolvent fund of any state, between the worst, California, and Texas, according to the US Department of Labor. California now has the highest unemployment debt of any state, with New York in second and Texas in third, according to the US Department of the Treasury.
“We were not well positioned for the unexpectedness of this crisis with the balance of funds we had,” Maria Doulis, deputy controller, told The Times Union. She noted that several other states weren’t either, but nonetheless New York, given the immediate hold of the coronavirus pandemic on the state, left the system “overwhelmed.”
The comptroller’s office is asking for a slightly different direction from the Department of Labor’s call for the federal government to write off New York’s $ 9 billion debt.
Both agree, however, that like what Washington did after the Great Recession that began in 2007, this should put an end to the automatic increases in insurance rates that employers have to put into the fund. The rising costs, which are borne by employers, are intended to help the state pay off its debt on a more urgent basis. They point to the disproportionate burden of the pandemic in New York City early on, before vaccine development and when employment reached Great Depression levels.
If the federal government does not freeze the rates employers must pay, New York business owners could benefit from continued increases: the tax rate is 0.6%, but would increase 0.3% each. year up to a maximum of 6%, or until the state has paid off at least part of its debts.
The added burden on small business owners is something State Comptroller Thomas P. DiNapoli tries to avoid.
âMeasures are needed to avoid increasing costs for New York businesses and slowing the state’s economic recovery,â DiNapoli said in a statement.
Doulis, who helped write the office’s unemployment debt report, said the state should first take some of its $ 5 billion in excess income and put it aside in its fund for days. rain exhausted. She said the state would then have to spend that money on capital improvement projects.
âAfter you beef up the rainy day fund, you can monitor both your tax resources and your federal aid to see if there is anything left that you would like to transfer to the trust fund,â Doulis said.
The debt could also be spent with federal help from the US bailout and other pandemic relief, she said. These additional sources should be combed through by state officials to find ways to repay them more, according to the comptroller’s office. States like Georgia and Ohio have contributed $ 1.5 billion in pandemic aid to its debt, the comptroller’s report points out, along with 30 other states that have used similar funds.