Unemployment Insurance Debt Clock Reaches 1,000 Days of No Action
Fiscal Burden on State’s Employers Growing
ALBANY – One thousand days have passed without New York State officials addressing the state’s Unemployment Insurance (UI) debt bill. The state borrowed federal funds to pay unemployment benefits following mandated business shutdowns during the COVID pandemic, and the state’s outstanding debt still totals nearly $7 billion. This debt is directly financed by increased payroll taxes on employers, and while New York businesses continue to pay record-high UI taxes to pay down this debt, they have already paid more than $2 billion in debt service and interest.
Earlier this year, The Business Council of New York State unveiled a clock that monitors how many days have passed without New York lawmakers taking action. The clock currently sits at 1,000 days, the time since the first proposed state budget was introduced with knowledge of a massive UI fund deficit.
“The Business Council began warning state lawmakers shortly after the pandemic began that, if not addressed, this multi-billion-dollar deficit would have a severe impact on the state’s employers, particularly small businesses,” said Heather Mulligan, President & CEO of The Business Council. “The current $7 billion debt, driven by state-mandated shutdowns, is expected to take up to a decade to pay back through elevated payroll taxes on New York employers. Sadly, this deficit is on top of the already increasing costs of doing business in New York state.”
Since the pandemic, more than 30 states have borrowed money from the federal government to fund their UI programs, and all but one state, New York, has either paid back the debt or used a mix of federal and state funds to alleviate the burden on their private sector employers. A recent U.S. Government Accounting Office report showed that twenty-four states spent $22 billion of their American Rescue Plan Act (ARPA) funds to help refinance their unemployment insurance trust funds.
Under existing state law, the entirety of the federal advances must be repaid through increased payroll taxes likely lasting the rest of this decade or beyond.