Jobless fund going broke State unemployment claims up 25 percent, federal loan looms
By RICK KARLIN, Capitol bureau First published in print: Wednesday, October 22, 2008
ALBANY — As Wall Street continues to struggle and the overall economy sags, New York's $615 million Unemployment Insurance Trust Fund is on the verge of going broke and is expected to look to Washington for a loan.
With unemployment claims up 25 percent compared with a year ago, when the fund was at $720 million, the coffers could run dry by early next year, officials predict. At that point, the state will turn to the federal government for a loan to continue payments to the unemployed.
The state unemployment fund is rated as one of five nationwide that are "not solvent,'' which means the reserves are less than three months' worth of payments, according to the National Employment Law Project, a group that follows labor issues. The others are South Carolina, Indiana, Ohio and Michigan.
The cash-strapped state had to pay the federal government $7 million in interest when the fund needed money in 2006. And there have been other payments in other troubled times, including the post 9/11 economic slump.
The state avoided interest payments in 2007 when it borrowed $222 million, but interest charges were avoided because the state didn't get a second loan that year and paid off the loan in May, said Leo Rosales, a state Department of Labor spokesman.
"It's something we expect," Rosales said, referring to turning to the federal government for loan to pay benefits. If the fund runs dry, it doesn't mean people won't get unemployment insurance, he added.
While this wouldn't be the first time New York's unemployment system has been bailed out by Washington, critics believe that chronic under-funding is leading to excess costs over the long-term because the state is exposed to paying interest on the federal loans.
"It's actually a pretty simple problem,'' said Andrew Stettner, deputy director of NELP, who explained that all employers pay into the fund, which is then tapped as needed.
While the unemployment fund hasn't been a major issue with the Legislature in past years, it could be a big topic come January given the looming recession and rising unemployment, which stood at 5.8 percent last month, up from 4.5 percent a year ago.
"I believe we will be revisiting this in the next session,'' said Assemblywoman Susan John, D-Rochester, who last year sponsored a bill that would have increased the amount employers pay and eventually raise the benefit cap to $550 a week and then index it to inflation.
Generally, New York provides up to 26 weeks of unemployment insurance with a cap of $405 a week. Congress last summer, though, provided for 13-week extension.
Stettner and John believe businesses should pay more unemployment taxes, which are only paid on the first $8,500 of individual earnings and average just over a half percent for all wages.
John noted that New Jersey and Connecticut tax the first $27,700 and $15,000 respectively.
Business interests say they would have to examine how a higher cap would affect them.
And they note that they also pay federal unemployment taxes, which come back in the form of loans as needed.
"They are essentially borrowing their own tax money back,'' said Margaret Moree, director of federal affairs at the state Business Council.
Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com.
is on the verge of going broke and is expected to look to Washington for a loan.
Well, now......ain't that an oxymoron.....insurance trust fund----WHAT THE HELL DOES THAT MEAN......who on this forum pays unemployment tax?????
WELL ALL FREAKIN' DO........DONT TELL ME THAT IT WILL 'GO DRY' BECAUSE THERE IS AN INCREASE IN CLAIMS-----ACCORDING TO THE TITLE IT SHOULD ALL BE THERE..........HHHHHHMMMMMMM
SHOW ME THE $$$$ TRAIL......WHERE IS IT?????? WHO HANDLES IT???? WHO WATCHES IT????? WHAT IS DONE WITH IT????? AND WHERE IS THE SPECIAL COMMITTEE OVERSITE????????????????????????
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
Isn't EVERYTHING going broke, leaving us suckers to pick up the tab?
"While Foreign Terrorists were plotting to murder and maim using homemade bombs in Boston, Democrap officials in Washington DC, Albany and here were busy watching ME and other law abiding American Citizens who are gun owners and taxpayers, in an effort to blame the nation's lack of security on US so that they could have a political scapegoat."
There is no real money....it's all credit and ratings......the scales are unjust and we measure ourselves by everyone else.....so here we are with our pants down......and if Mr.Robin in the Hood Obama thinks he needs to rob from the rich and give to the poor, I suggest a more chivalrous plan and take on the unjust scales...............he needs to grow a large pair of cahounas for that job.....robbing from the rich and giving to the poor is a stage part......
atleast Mr.McCain McProfit knows who he is and where he came from,,,,although he himself would find it difficult to take on the unjust scales......
BOTH PARTIES PLAY IN THIS SAND BOX.......AND THAT SANDBOX BALANCES AT THE TOP OF THE PYRAMID....AS FOR THE SOCIALISTS,,,THEY THINK THEY CAN DO IT BETTER......EVERYONE WANTS TO PLAY SANTA CLAUS......
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
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