Comptroller seeks alternatives to pay off New York unemployment fund deficit
ALBANY, NY (WSKG) – The New York Unemployment Insurance Fund, which the state Department of Labor says has paid more than $ 100 billion in benefits to millions of New Yorkers during the pandemic COVID-19, is now in deficit.
State comptroller Tom DiNapoli is now proposing ways to make the fund – which owes the federal government $ 9 billion – solvent.
Private state enterprises are responsible for maintaining the balance of the unemployment insurance fund. States are allowed to borrow from the federal government when the fund is in deficit. Employers must provide the extra money to repay the loan.
DiNapoli said the pandemic has caused an unprecedented number of temporary and permanent job losses, with more than 4.7 million New Yorkers receiving benefits.
In January 2020, before the pandemic hit, the fund had a surplus of $ 2.65 billion and was paying an average of $ 531 million in benefits each quarter. This amount rose to $ 6.5 billion in the second quarter of 2020.
âIt’s an increase of over 1000%,â DiNapoli said. “The magnitude of the increase is something I think no one could have ever imagined.”
He said business owners could see their unemployment insurance costs, which are calculated on a company’s payroll, increase to as much as 9% at a time when the economic recovery has been uneven and de many employers struggle to stay afloat.
“It will hurt employers, it will be more difficult for them to get back on their feet, it might be more difficult for them to hire people,” said DiNapoli. “We haven’t returned to pre-pandemic employment levels, and it could certainly be negative to get us back to this point.”
In a report, DiNapoli said Governor Kathy Hochul and legislative leaders should seek alternatives. The state collected $ 5.9 billion in taxes and other revenue this year beyond initial expectations. Business groups have called for some of this money to be used to help replenish the fund.
DiNapoli said this argument was valid.
âMaybe some of those billions could be spent paying off this unemployment loan that we owe as a way to ease the burden on businesses,â DiNapoli said.
A financial update from the governor’s budget office said the additional revenue that has been collected will be used to keep the state budget in balance for the next two years, and $ 1.1 billion will be placed in a reserve fund to deal with the ongoing pandemic and new variants of the virus that could disrupt the economy and the healthcare system.
A spokeswoman for the state Department of Labor did not respond to specific questions about the unemployment insurance fund. But in a statement, spokeswoman Deanna Cohen said New York, along with many other states, had asked the federal government for loans to cover the deficit. She also said that the current state budget already gives companies more than $ 1 billion in grants to help deal with the pandemic.
Cohen said the state is also asking the federal government to completely write off the state’s unemployment insurance debt due to the “historic nature of the economic downturn” during the pandemic.
The State Council also called for the federal government to exempt the state from paying the deficit.