NY business owners see additional labor bills
NEW YORK STATE--Following a report by New York Comptroller Thomas DiNapoli earlier this summer, business owners across the Finger Lakes are now seeing additional bills to pay for borrowed money by the state used for unemployment benefits during the pandemic.
According to the comptroller's office, "Devastating job losses caused by the COVID-19 pandemic led to a record number of unemployment insurance (UI) claims in New York and other states. Benefits paid through such claims are part of the safety net, and are financed with federal and state payroll taxes collected from employers...New York's UI fund did not have sufficient funds to pay the surging claims, and began to borrow from the federal government starting in May 2020."
It continues, "While many states had to borrow from the federal government to support UI claims, New York is one of only seven states or territories with UI funds that continue to be in debt to the federal government, and the size of the outstanding loan balance--$8.1 billion--is second only to California. In May 2022, New York state paid $1.2 billion of its federal loan, but New York's UI debt has remained stubbornly high despite steady employment gains and state tax rates that have already increased to maximum permissible levels. If New York's outstanding balance is not fully repaid by Nov. 10, 2022, interest costs will mount, as will the federal portion of employers' 2022 tax bills. Absent any significant federal or state action, employer costs will continue to grow, potentially impeding the state's employment recovery amid growing economic uncertainty."
The comptroller notes that, "states have addressed their outstanding advances with the federal Unemployment Trust Fund (UTF) by using surplus funding, issuing bonds, and modifying tax rates. In addition, the National Conference of State Legislatures notes that 20 states have used American Rescue Plan (ARP) Act State Fiscal Recovery Funds to repay these loans and/or replenish state UI funds. States that have taken such actions since September 2021 include Nevada, Ohio, Maryland, Texas and Minnesota."
New York did not apply any of its federal relief funds to the UTF, and the budget for fiscal year 2022-23 did not include the use of federal or state funds for this purpose. This means an additional payment of $21 per employee will be required by business owners this year along with $42 next year and it increases by $21 each year until the balance is paid off.
According to The Wall Street Journal, California, Illinois, Connecticut and New York will all see the surcharges.
Although New York had a loan balance of $8.1 billion, it reported $12.9 billion in excess revenue last year.
During the 2022 State of the State address, Gov. Kathy Hochul made multi-billion dollar commitments to healthcare, tax rebates, housing, rescue plans and infrastructure.
The Business Council of New York had advocated prior to the close of the legislative session in spring for the state to reduce the burden on employers.