The Business Council, NFIB Urge State Action to Alleviate Multibillion-Dollar Unemployment Insurance Debt for Businesses
ALBANY – With less than ten legislative session days remaining, The Business Council of New York State and NFIB are encouraging the New York State Legislature to provide unemployment tax relief to state employers and begin addressing the state’s massive $8 billion Unemployment Insurance Fund (UI) debt. Doing so would alleviate some of the increased UI tax burden adversely impacting businesses, especially small businesses.
Often a leader on major policy issues New York State is becoming a major outlier in its failure to address the financial crisis facing its Unemployment Insurance program.
New York is now just one of eight states left with an outstanding loan from the federal government for its UI program, funds that were borrowed in 2020 to cover the unprecedented increase in UI claims resulting from government-directed business shutdowns in response to the COVID pandemic. Under existing New York law, this now $8.2 billion debt and related interest will be paid back through increased federal and state employer payroll taxes.
“Illinois and Minnesota were the two most recent state to apply federal pandemic aid to pay down their UI debt and protect their businesses from increased taxes,” said Ken Pokalsky, Vice President of The Business Council. “While we do not expect New York to cover our entire $9 billion debt, we urge state leaders to dedicate public funds to offset the impact of federal interest payments and increased FUTA taxes, and provide immediate UI tax relief for employers, as we continue to work on a more complete approach.”
To date, 34 states have used nearly $30 billion in federal pandemic aid to address their UI program debt. New York and California are the only two major debtor states that have yet to act. California is considering proposals from Governor Newsom and their state Assembly to pay down a portion of that state’s $18 billion in outstanding advances.
“New York’s small businesses continue to face avoidable economic headwinds that are delaying recovery and driving costs higher during a time of rampant inflation,” said Ashley Ranslow, New York State Director, National Federation of Independent Business (NFIB). “Oppressive Unemployment Insurance tax bills and the state’s more than $8 billion in UI debt cannot continue to go unaddressed. New York must join states like Minnesota in using public funds to pay down the debt, as well as provide UI tax relief to our Main Street businesses. With supply chain disruptions, increased labor costs, labor shortages, and out-of-control inflation, small businesses are at their breaking point and looking for the state to do its part in helping to resolve the UI Trust Fund crisis.”
Earlier this month, New York made $1.2 billion in federal UI loan repayments, using proceeds from employer tax payments, a significant portion of which are made in the first quarter of the year. However, to date, New York has not authorized any public cost-sharing.
Assemblymember Al Stirpe (D-127th District)
"Small businesses are the backbone of New York's economy and it's critical that we do everything we can to ensure these economic drivers can recover and thrive in the wake of the COVID-19 pandemic. Since this crisis began, there’s been a massive increase in unemployment claims that has impacted small businesses throughout the state. As Chair of the Assembly Small Business Committee, I've listened to the small business community and taken significant steps to provide support including sponsoring legislation to establish an amnesty period for employer contributions to the Unemployment Insurance (UI) Trust Fund. But we're not out of the woods yet. I'll continue working in the Assembly to support the mom-and-pop shops and local mainstays that make our communities special."
Senator Anna M. Kaplan (D-7th District)
“So many of our State's small businesses barely survived the challenges of the pandemic, and if we allow them to be hit with massive increases in their unemployment insurance taxes, many will be forced to close their doors for good. We can’t expect small businesses to shoulder the burden of repaying the federal government alone, and our long-term economic recovery depends on us taking bold action now to reduce the State’s outstanding unemployment debt. We must do more as a State to avert this looming crisis.”