New York State’s recently enacted budget, as usual, reflects a series of compromises. Some outcomes were favorable for the business community, while others fell short of expectations. Still, the most consequential decision was a clear win for businesses across the state: Governor Kathy Hochul’s choice to allocate $8 billion from state reserves to fully repay New York’s outstanding federal unemployment insurance debt and restore the fund’s solvency. This action will have a lasting impact on employers statewide and deliver much-needed financial relief.
Since New York State borrowed money from the Federal government to keep our workers afloat during the COVID-19 pandemic, every business in our state was charged additional fees while the State’s debt remained unpaid. Since 2022, every business was charged an Interest Assessment Surcharge (IAS) to help cover the growing interest on the debt, as well as higher UI contribution rates and increased federal tax liability – all of which will now be removed. The amount that New York State businesses paid in these taxes varied widely, as the fees were assessed based on employee count. Small organizations may have paid a few thousand dollars annually, and one of our largest members in the Greater Rochester region paid over $700,000 last year. When you tally up what all businesses have paid, from the small mom-and-pop shops to large corporations, the hit on businesses during these years has been a large one.
In making this decision, Governor Hochul showed strong leadership during uncertain fiscal times by using a substantial amount of our state’s reserves to reduce this burden for every single business in New York State. Greater Rochester Chamber has personally worked with her and other key decision makers to lobby for this debt to be paid off since its inception. While New York State has many priorities to balance and there is a significant financial impact from this decision, it is undeniable that this year was the right time to take action. Between the prospect of taxes levied on businesses going up this year if the loan was not paid off and the pending Federal budget cuts and potential impact of tariffs, New York State businesses were having to take on a burden too big to bear.
Because of all the fiscal stressors that are looming, this was a very difficult decision to make and one of the last budget additions to be agreed upon. I want to applaud Assemblymember Harry Bronson and Speaker Carl Heastie for their leadership and collaboration throughout the budget process to keep this issue at the front of negotiations until the very end.
While businesses were burdened with additional costs due to the outstanding debt, unemployment benefits could not increase for recipients – meaning that due to inflation, beneficiaries of the unemployment payments would earn less than minimum wage while out of work. This means both business and labor alike were severely and negatively impacted. The alliance that came together to push for this decision is one that should make us proud, and we should continue to identify additional issues where alignment exists since business and labor groups’ successes are inextricably linked. This victory is a shining example of what can be accomplished when groups come together to focus on a single issue.
Since this decision was made, I have received many responses every day from our 1,300 member companies, all relishing this decision and sharing the impact that it will have on their respective finances. I am certain that my colleagues at the Business Council of New York State, who were also vocal
advocates for this topic, and other organizations around the state could share similar stories in their respective communities.
Governor Hochul’s leadership on this subject is something we should all be grateful for and proud of. By delivering this relief, she is creating opportunities for New York’s businesses to reinvest in our communities and showcasing the way bold leadership drives results. This is a win for business, for labor, and for New York State.
Bob Duffy, President & CEO, Greater Rochester Chamber of Commerce
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