Empire State Today

New York budget negotiators, including Governor Kathy Hochul along with the state Senate and Assembly, are working on providing relief to businesses from unemployment taxes, amidst the state's budget discussions. The talks involve repaying $6.5 billion to the federal government, borrowed during the Covid-19 pandemic to support the state's unemployment system. This repayment could influence the tax relief businesses receive.

Both businesses and labor unions are advocating for Albany leaders to pay the full amount back, which could result in an individual benefits increase and a reduction in business taxes by around $300 per employee. The Assembly has backed this plan, while the governor and the Senate have suggested covering only this year's interest payment of about $165 million, potentially saving businesses $15 per worker. The Senate is also considering a small business tax break.

Mona Golub, a spokesperson for Northeast Grocery Inc., expressed concerns about the impact of increased unemployment taxes on business investments. "Every dollar that's spent on increased unemployment taxes is a dollar that we're unable to reinvest in our business, whether we're talking about wages, or hiring, or expanding, or upgrading our stores," Golub stated.

Currently, only New York and California have not reimbursed the federal government for the borrowed assistance. Businesses faced added charges in 2024, with the National Federation of Independent Business noting an average of $320 extra per employee due to the debt.

Rod Dion, owner of Tech Valley Office Interiors, remarked on the financial challenges of running a business in New York: “It’s the accumulation of everything that makes doing business in New York so frustrating. I never laid off anybody in 2020.”

Businesses argue against the rising costs, especially those that did not have employees on unemployment during the pandemic. Meanwhile, workers also bear some costs, as suggested by the New York State AFL-CIO, which claims the state cannot boost unemployment benefits from the current $504 weekly until the debt is settled.

Governor Hochul and the state Senate propose allocating up to $250 million to cover interest, while the Assembly aims to draw $7 billion from state reserves for a full payment. "Governor Hochul continues to negotiate in good faith with the Senate and Assembly," noted Hochul spokesperson Kassandra White.

Assembly Speaker Carl Heastie has underlined the debt issue, mentioning: “We are years behind where the benefit should be for employees who apply for unemployment.”

State Senate Majority Leader Andrea Stewart-Cousins and others are exploring various proposals, including tackling the UI expense, amidst ongoing state budget discussions. “We’re all trying to find something that we can do to help businesses with their UI expense,” Stewart-Cousins stated.