$8.1 Billion dollars in Unemployment Debt,
New York Needs Another Solution
New York’s current plan for managing its $8.1 Billion Dollar Unemployment Insurance fund debt is to increase state (UI) and federal (FUTA) tax rates on business. The choice to place this enormous burden on business is especially galling after the economic destruction caused by the Covid-19 lockdowns and already high taxation rates. Governor Hochul and the NYS legislatures’ decision should be costly in an election year but not likely. However, New York’s lead in the nation of population loss (365,000 people in mid-2021) will likely grow.
There are some Democratic politicians who potentially understand the graveness of this additional burden and suspect the consequences will not be good for New York. Speaker Heastie, unremarkably, looked for a solution by calling on the federal government for further relief funds. Other state Senators and Assembly people have urged help as well. But they all seem to miss the critical point–they helped cause this problem by agreeing to a massive $220 Billion dollar budget.
Texas, unlike New York, responsibly budgeted a $7.2 Billion payment to its unemployment fund debt with federal relief funds given to all states in the American Recovery Plan Act. New York’s budget stands in stark contrast to other similarly sized states. Take Florida with a slightly larger population but whose budget is only half of New York’s at $105 Billion dollars. There’s money available in New York’s state budget to pay this Unemployment debt. The sad truth is Governor Hochul and Speaker Heastie, and the other Senators and Assembly people don’t want to use the resources they already have to pay this debt. Exacting more from businesses on a payable debt may get them more votes from their constituencies but will make it unlikely for businesses to recover and cause them to head to states that want their business.