New York Borrowed Heavily To Pay Unemployment Benefits. Now It Owes $9B
New York borrowed a lot of money from the federal government to keep up with the demand for unemployment benefits during the pandemic. The state now owes at least $9 billion.
State Comptroller Thomas DiNapoli said the state was unprepared for an 1,100% increase in demand for unemployment. New York paid out over $6.5 billion during the first few months of the pandemic alone. That’s nearly three times what the state had reserved for jobless benefits.
So, the state borrowed money from the federal government and now it owes more than double what it borrowed during the Great Recession.
DiNapoli worries this will create serious challenges for the state’s post-pandemic economic recovery because the debt burden could be shifted on to New York businesses through unemployment insurance tax hikes.
DiNapoli said the state’s unemployment insurance tax rate on employers could reach almost 10% by November 10 to pay back the state debt. He wants state lawmakers to work out a new debt repayment plan with the federal government that reduces the burden for employer contributions.