Written by Michael Moran on June 24, 2010 – 6:22 am
The Wall Street Journal’s Jacob Gershman writes, “New York’s unemployment−insurance system is borrowing money from the federal government at an explosive pace −− sinking $1 billion deeper into debt since the beginning of the year −− and that has businesses bracing for a sharp increase in taxes.
As New York continues to shed private−sector jobs, the fund that pays unemployment claims is now $3.2 billion in the hole, the largest deficit in the nation after Michigan and California.
Since the fund dipped into the red a year and a half ago, the state has accumulated a deficit more than four times greater than the widest gap it faced during the last recession nine years ago.
Gov. David Paterson and lawmakers are considering legislation that could raise taxes to cover the deficit and to increase the maximum weekly benefit of $405 by more than 50% by 2013.
Currently, employers pay the state a rate of 1.5% to 9.9% −− with higher levels paid by businesses with more layoffs −− on the first $8,500 of wages. Lawmakers are considering raising that over the next two years to $13,500.”
He adds, “Business advocates say they’re trying to negotiate a compromise that doesn’t further knock down recession−scarred employers.
“It’s a real possibility that the size of the repayment to the federal government is such that it will hinder economic growth, and that’s before we talk about any changes to the benefit levels,” said Margaret Moree, director of federal affairs for the New York State Business Council, a lobbying group based in Albany.
New York is now paying jobless benefits to more than 500,000 residents as of May, according to state data. New York’s unemployment fund pays for the first 26 weeks. The federal government covers up to another 73 weeks.”