The Business Council Calls for State Action to Address Unemployment Insurance Debt
Use of Federal Funds Would Reduce Payroll Tax Burden on All Businesses
ALBANY – The Business Council of New York State is urging the state legislature to provide unemployment tax relief to state employers and begin addressing the massive $9 billion Unemployment Insurance Fund (UI) tax debt. Providing funds to the system through the budget process would alleviate some of the UI tax burden adversely impacting businesses, especially small businesses.
Due to state-mandated shutdowns during the height of the COVID pandemic, the state’s UI program saw an unprecedented number of claims. New York State borrowed $9 billion from the federal government to cover the costs. Under existing New York law, this debt and any related interest must be paid back through increased employer payroll taxes, an increase on top of the regular tax payments necessary to keep the fund whole moving forward, and in addition to increased federal UI payroll taxes.
“We don’t expect the state legislature to cover the full $9 billion burden; however, we believe lawmakers need to make a significant down payment and provide immediate UI tax relief,” said Ken Pokalsky, Vice President of The Business Council. ”The shutdowns were state-mandated measures to address a growing public health crisis, not the fault of private-sector employers, so it makes sense to have a public-private sharing of this repayment. State relief will help businesses who continue to face challenges due to the pandemic.”
New York’s borrowing is not unique. During the height of the pandemic, most states took advantage of available federal advances to maintain UI benefit payments. Importantly, however, 32 other states have already applied more than $20 billion in federal emergency COVID aid to bolster their state unemployment insurance programs and repay part or all of their federal advances, providing tax relief to employers and restoring financial stability to their UI systems.
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