BCW Joins Business Groups Calling on State to Address Unemployment Insurance Debt
The Business Council of Westchester is among 27 other business groups statewide that are calling for Gov. Kathy Hochul’s Administration and the State Legislature to address one of the most significant lingering financial burdens caused by the COVID pandemic: the $8 billion in outstanding federal loans to New York’s unemployment insurance (UI) program.
This debt results in hundreds of millions in higher federal and state payroll taxes on New York’s private sector employers. The group argues that since this debt results from state-directed office closings, it makes sense that public funds be used to help address the debt of this otherwise 100% employer-funded program.
In an open letter to Albany lawmakers, the group led by the Business Council of New York State noted that state contributions were the approach taken by a majority of states. To date, 33 states have devoted more than $26 billion in public funds to pay off federal advances, stabilize their UI programs, and reduce the UI tax burden on their employer community. New York is the only state that took significant federal UI loans and failed to apply state resources to provide UI payroll tax relief to employers.
Among the recommendations made by the group to address the crushing debt
- Pay the annual interest on outstanding federal loans, estimated at up to $130 million in 2023. This would prevent the state from sending employers a second UI tax bill each fall to generate funds to pay federal interest.
- Offset the impact of increased federal UI taxes on employers. Employers in states with outstanding federal UI advances see their federal unemployment insurance tax increase yearly until the debt is fully repaid. Without state relief, this FUTA increase will cost New York employers more than $250 million in 2023.
- General fund reimbursement of fraudulent payments would avoid adding the cost of these state-approved payments to be borne solely by employers through increased payroll taxes.
- Devote public funds to paying down a share of the state’s now $8 billion federal UI advance. The state should make a material down payment on this federal debt in the FY 2024 budget and adopt a multi-year commitment for additional payments at a level that can be accommodated in the state financial plan.
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