New York has paid off the nearly $7 billion in unemployment insurance debt to the federal government that ballooned in the state during the COVID-19 pandemic after it was included in the state budget that was passed in May, Gov. Kathy Hochul announced Monday.
Although the state initially planned to only cover the interest on the debt, Hochul said she changed course after meeting with business leaders during spring budget talks. She concluded that eliminating the full debt would better support businesses if the economy were to decline. The funds came from the state’s reserves, which Hochul has previously referred to as New York’s “rainy day fund.”
Since the pandemic began, the weight of the debt has fallen on businesses through higher taxes and reduced unemployment benefits. New York was one of just two states still carrying federal unemployment insurance debt tied to COVID-19, after it declined to use $25 billion in federal stimulus money for unemployment tax relief.
“By paying off this unprecedented Unemployment Insurance Trust Fund debt, we are delivering long-overdue relief to New York’s workers and businesses,” Gov. Kathy Hochul said in a statement Monday. “This is about doing what’s right — raising benefits for unemployed New Yorkers who need support, cutting costs for businesses that are driving our economy forward, and putting money back into New Yorkers’ pockets. I’m proud to stand with our labor partners in making this progress possible.”
Hochul noted that clearing the debt allows the state to raise the maximum unemployment insurance benefit. Starting in October, the weekly maximum benefit for unemployed workers—previously frozen due to the debt—will rise from $504 to $869.
The effort to erase the unemployment insurance debt was a key priority for several lawmakers this budget season, including Assembly Speaker Carl Heastie.
Leave a Reply