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Unemployment Insurance Committee Update

April 26, 2010

Governor Seeking Benefit Increase, Trust Fund Solvency

In a yet to be introduced Governor's Program Bill, Governor Paterson is seeking to submit to the Legislature a bill which will increase unemployment insurance benefits and address New York's UI Trust Fund solvency issues through a series of tax table adjustments and increases to the taxable wage base.

New York's UI Trust Fund has been in borrowing status for much of the last two years, with a balance due of approximately $2 billion. The federal stimulus bill suspended interest payments on the borrowing for all states until the end of 2010 and it is unclear whether Congress will extend those business relief provisions beyond their sunset date.

The Governor's bill anticipates addressing solvency in two ways. The Administration proposes to eliminate the first column on the UI tax tables — the lowest tax rate and the rate at which one-third of all New York's tax rated employers currently pay (before add-ons). Additionally he proposes to increase the taxable wage base — currently at $8,500 — in annual increments over the next eight years to $14,000 and starting in 2019 setting the taxable wage base at 18% of the State's average annual wage. Under the Governor's proposed plan, starting in 2021, the Governor proposes to provide flexibility in the setting of the taxable wage base based on the balance in the UI Trust Fund, but under no circumstances can the taxable wage base go below $10,000.

According to the Governor's staff, this two-pronged approach will put the Trust Fund on a solvent path and allow for a benefit increase. The current maximum UI benefit in New York stands at $405. The Governor proposes to increase the weekly benefit starting in July 2010 to $446, to $471 in 2011; and thereafter increasing the maximum benefit rate by one percent each year until 2019 when it will be set at 50% of the average weekly wage. The Governor proposed to index the benefit from 2019 on to 50% of the state's average weekly wage.

The Administration's draft legislation proposes no major eligibility changes and makes other minor adjustments to penalties for claimants and employers.