Government Affairs Albany Update
May 22, 2009
- Unemployment Insurance Update
- Empire Zone Technical Amendments
- "Preliminary" Recertification/Decertification Letters
- Comptroller April Cash Flow Report
The following provides an update on unemployment insurance legislation pending in New York. We urge members to give us input as soon as possible on the benefit increase/UI tax increase proposals now pending in the state legislature.
S.4110-A/A.8273 has passed both houses, and has been approved by the Governor. This bill adopts several changes to the Labor Law to conform to standards set forth in the American Recovery and Reinvestment Act of 2009, permitting New York State to be eligible to receive the maximum amount available from the “unemployment compensation modernization” section of the ARRA. Specifically, it makes New York eligible for a minimum $275 million in UI funds from ARRA that are not required to be reimbursed by New York businesses. New York's UI Trust Fund has borrowed over $1 billion from the federal trust fund, all of which will have to be paid by New York's business community. While the ARRA has waived the interest due on this money through 2010, interest will accrue on unpaid balances starting in 2011, which also will be assessed across NY's employers.
The Business Council supported the amended version of this bill, which was amended to provide additional clarifications to eligibility for the reason of voluntary separation with good cause to include“the illness or disability of a member of the individual's immediate family.”
Importantly, this bill does not increase maximum weekly benefits, nor does it modify the state's taxable wage base or UI tax tables.
There is legislation on the table that would both increase (and index) benefits, and increase the taxable wage base, and The Business Council is on record opposing them. These bills are summarized below.
Obviously, there is considerable legislative interest in UI benefits and the solvency of the state's fund.
We have been reaching out to Business Council members on these bills, and urge you to contact us with your specific comments and recommendations regarding the state's UI system.
- S 2245 (Onorato)/A4921 (John) would provide for four years of annual increases in the maximum weekly UI benefit, to a maximum of $625 in 2012, then indexed to one-half the state's average weekly wage in 2013. This is a 53% increase in the benefit over that three year span; the benefit increase would be funded through an increase in the taxable wage base from its current level of $8,500 to a level of $13,000 in 2012. With an average employer UI tax rate of 3.5%, the per employee annual unemployment insurance tax would rise from $297 to $455. This bill would index the UI benefit starting in 2013 to one-half the state's average weekly wage and give the Commissioner of Labor the authority to set the taxable wage base at a level sufficient to fund the annual increases in benefits. Note that this bill has already moved out of Senate Labor, and is on Senate Finance Committee agenda next Wednesday.
- A.8100 (John), combines both the benefit increase as structured in S.2245/A.4921 and the eligibility expansion categories included in S.4110. It provides no additional clarification on the definitions within the proposed new category of voluntary quit with good cause for leaving employment due to the illness or disability of an immediate family member. The Business Council opposes this bill both because it contains an automatic indexing provision for UI benefit increases, and the broadness of the new category of UI eligibility.
To discuss any of these bills please feel free to contact Lev Ginsburg.
The Senate has introduced legislation, S.5988 (Stachowski) to address several issues of concern related to recent Empire Zone program changes. The bill: protects businesses that have increased employment and/or made significant investments from decertification under the so-called “shirtchanger” test; clarifies the meaning of “change of ownership” for purpose of decertification; allows businesses with multiple Empire Zone facilities, and companies with multiple zone-certified subsidiaries, to elect to have them aggregated for the purpose of the new “1 to 1” test; and makes new decertifications effective for tax years beginning on or after 1/1/09. The Business Council supports this legislation. The bill text and our memo in support are available here.
Staff contact: email@example.com
Empire State Development has sent letters to all current Empire Zone companies indicating whether they are likely to pass or fail the new “economic return” and “shirtchanger” criteria, adopted with the FY 2010 state budget (details on these Empire Zone program changes are available here.)
ESDC has indicated that final determinations will be made by the end of June. Importantly, for businesses that fail a strict application of either the “economic return” or “shirtchanger” test, ESDC has statutory discretion to extend their Empire Zone certification based on other “economic, social and environmental factors.” ESDC will be making these determinations prior to issuing their final notices to Zone companies. Once the final ESDC notice is issued, businesses have 15 days to appeal these decisions to state zone designation board.
We are interested in hearing from Business Council members that have been adversely impacted by this decertification process, as well as additional feedback on the technical amendments bill discussed above.
Staff contact: firstname.lastname@example.org.
The State Comptroller issued its cash flow report for the month of April 2009, showing that state revenues for the first month of Fiscal 2010 were $3.8 billion, or 44 percent, less than April 2008 and $239 million below the Governor's April 28 projections.
Comptroller Tom Dinapoli summarized this report saying, “This was a poor start to the fiscal year,” DiNapoli said. “It's been less than a month since the state's financial plan was released, and General Fund revenues are already off nearly a quarter of a billion dollars,”
And concluding, “We need to watch revenues and spending very closely, because the state may be forced to readjust priorities.”
Note that these revenue numbers were not impacted by the newly adopted personal income tax brackets and rates.