Tell Lawmakers: Address the Unemployment Insurance Crisis
As Governor Hochul and the state legislature put the new state budget together, they should follow the lead of 31 other states and use a share of its emergency federal funding to address a massive deficit in the state’s unemployment insurance program.
Nearly 1.7 million New Yorkers lost their jobs in March 2020 as the state mandated the closure of many businesses in response to the rapid spread of the COVID virus. Claims for jobless benefits quickly drained New York’s unemployment insurance account, which had a nearly $2 billion balance a month earlier, driving it deeply into debt.
New York, and other states, accepted significant federal advances to assure the continued payment of unemployment insurance benefits to workers who had lost their jobs. This has left New York’s UI account with more than $9 billion, and under current law, the total amount will be repaid through increased state and federal payroll taxes on New York State employers, who will be facing record-high payroll taxes for the remainder of this decade, perhaps beyond.
Many states have already taken a different approach, using emergency federal funds to address their severely stressed UI systems. As of September 2021, 31 states had already used more than $15 billion of CARES act or ARPA funds to bolster their UI programs.
Using public funds to help address this state deficit makes sense as it was driven by public health concerns, not the actions of individual employers. The result would be a more equitable sharing of the cost of pandemic-related unemployment insurance benefits.
Legislation has already passed the New York State Senate and is under consideration in the Assembly to provide short-term UI tax relief. While welcome, that legislation does not address the underlying debt burden, and more needs to be done. The state should dedicate upwards of $2 billion to the state’s unemployment insurance program to 1. assure that UI tax relief will not result in additional program debt, 2. offset the costs of any interest payments on the state’s federal debt, 3. offset any increase in federal UI taxes applicable to New York employers, and 4. make a material down payment on the $9.3 billion in outstanding federal advances.
Absent state action, New York’s UI taxes will be another long-term cost burden on New York employers, small and large, and one more impediment to the state’s economic recovery.
Tell Lawmakers: Address the Unemployment Insurance Crisis
As Governor Hochul and the state legislature put the new state budget together, they should follow the lead of 31 other states and use a share of its emergency federal funding to address a massive deficit in the state’s unemployment insurance program.
Nearly 1.7 million New Yorkers lost their jobs in March 2020 as the state mandated the closure of many businesses in response to the rapid spread of the COVID virus. Claims for jobless benefits quickly drained New York’s unemployment insurance account, which had a nearly $2 billion balance a month earlier, driving it deeply into debt.
New York, and other states, accepted significant federal advances to assure the continued payment of unemployment insurance benefits to workers who had lost their jobs. This has left New York’s UI account with more than $9 billion, and under current law, the total amount will be repaid through increased state and federal payroll taxes on New York State employers, who will be facing record-high payroll taxes for the remainder of this decade, perhaps beyond.
Many states have already taken a different approach, using emergency federal funds to address their severely stressed UI systems. As of September 2021, 31 states had already used more than $15 billion of CARES act or ARPA funds to bolster their UI programs.
Using public funds to help address this state deficit makes sense as it was driven by public health concerns, not the actions of individual employers. The result would be a more equitable sharing of the cost of pandemic-related unemployment insurance benefits.
Legislation has already passed the New York State Senate and is under consideration in the Assembly to provide short-term UI tax relief. While welcome, that legislation does not address the underlying debt burden, and more needs to be done. The state should dedicate upwards of $2 billion to the state’s unemployment insurance program to 1. assure that UI tax relief will not result in additional program debt, 2. offset the costs of any interest payments on the state’s federal debt, 3. offset any increase in federal UI taxes applicable to New York employers, and 4. make a material down payment on the $9.3 billion in outstanding federal advances.
Absent state action, New York’s UI taxes will be another long-term cost burden on New York employers, small and large, and one more impediment to the state’s economic recovery.