Despite recent significant payments to the federal Unemployment Trust Fund (UTF), New York is one of only seven states or territories with unemployment insurance (UI) funds that are in debt to the federal government, and the $8.1 billion owed in the outstanding loan balance is second only to California, according to a new analysis by State Comptroller Thomas P. DiNapoli.
As DiNapoli detailed in a September 2021 report, the devastating job losses caused by the COVID-19 pandemic led to a record number of UI claims, necessitating continued borrowing from the federal government beginning in May 2020. If New York’s outstanding balance is not fully repaid by November 10, 2022, interest costs will mount, as will the federal portion of employers’ 2022 tax bills.
“New York’s unemployment insurance debt has remained stubbornly high despite steady employment gains and state tax rates that have already increased to maximum permissible levels,” DiNapoli said. “Absent any significant federal or state action, repaying the loan and replenishing the unemployment fund will require federal tax increases that may be burdensome to small businesses and could hinder the state’s economic recovery.”
DiNapoli’s analysis includes:
- A month-by-month look at the UFT loan balance;
- The state’s increased UI tax collections; and
- Responses by other states.
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