Posted on 01/21/2009 8:42:51 PM PST by neverdem
New York State’s unemployment insurance system, besieged by claims from laid-off workers, ran out of money on the first business day of the year and is borrowing daily from the federal government to bridge a fast-growing and potentially huge deficit, state labor officials say.
Despite paying lower benefits to its jobless residents than other Northeastern states, the state’s unemployment fund has been borrowing about $90 million a week from the federal unemployment trust fund, state officials said. The deficit has already reached $212 million and is expected to exceed $2.5 billion by the end of 2010, they said.
State officials say that the deficit does not threaten the continued payment of benefits.
But the loans could wind up costing the state’s unemployment fund more than $100 million in interest and could result in a punitive tax on all employers across the state two years from now, state officials and experts on the unemployment insurance system said.
More than 500,000 people were collecting unemployment checks in New York State in the first week of this year, nearly three times as many as a year before.
The system’s ballooning deficit is a result not only of the flood of new unemployment claims, but also of the relatively low payroll tax that finances unemployment benefits. The state has not increased that tax in nearly a decade, mainly because of opposition from business groups, making it difficult to avoid shortfalls even in milder downturns, officials and experts say.
The state fund also had insolvency troubles, though less severe, after the recession that began in 2001. But disputes over how to fix the system prevented Albany from taking action, leaving the state vulnerable to a replay this year, state officials and advocates for low-wage workers said.
The state’s poorly financed unemployment system has had another...
(Excerpt) Read more at nytimes.com ...
‘...the state’s unemployment fund has been borrowing about $90 million a week from the federal unemployment trust fund,”
The federal unemployment trust is borrowing from the extra funds in the big three bailout fund. That fund is borrowing from the first half of the bank bailout. The first half will borrow from the second half of the bailout fund. When that fund runs out new printing presses will be brought in.
The NY Times constantly compares NY to NJ.
That is like comparing Cuba and North Korea to figure out what a standard should be.
Just wait till the depression really hits. Unemployment insurance claims alone will run into trillions, and welfare after that.
How long until we have $50,000 of debt for the privilege of being a New Yorker?
It would be funny if it wasn't so bad. It makes me think of the Weimar Republic.
Not surprising. I’m sure their unemployment rate is even higher than officially stated in NYC.
For every major wall street job, there is about 3 to 4 jobs that feed off it in that city. From assistants, to taxi drivers, to food service workers, etc, etc.....
I know, it’s scary.
Fiscal clusterf***.
Hillary was such a great senator! /s
No one mentions the billions of dollars that were never collected in the NY Unemployment fund by employers who hire illegal immigrants under the table in New York State.
How in two years’ time when the NY Legislature and US Treasury demand the interest payments on this debt can the state and Fed gov justify the lack of a nationwide employment eligibility scheme that has a tamper proof “right to Work” card at it’s core?
NY is way beyond the tipping point, add up the welfare and unemployment recipients, the corporate welfare, and the government employees, and you have summed together the vast majority of the state’s workforce. Increasing the state unemployment tax proportionally increases the local and state employees’ payroll, which will be paid for by private employers increased taxes.
Private employers are going to be doubly disadvantaged and triply taxed under the future unemployment tax regime.
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