Amid federal treasury debt, New York businesses protest what they see as a state COVID tax

COLONY — New York businesses continue to emerge from the peak of the COVID-19 pandemic two years ago, with ongoing supply chain issues, higher costs and difficulty finding employees.

And now they’re being hit with what you might call a state COVID tax.

Businesses across the state recently learned they have until Sept. 30 to pay an interest assessment surcharge of $27.60 per employee.
The money will go to the state labor department, which will in turn use it to pay interest on the roughly $8 billion the state still owes to the US Treasury.

During the worst phase of the pandemic, New York had to borrow a total of $9.9 billion at 2.27% interest in order to pay unemployment benefits to the thousands of people laid off by COVID and its concurrent closures.

A fee of $27.60 per person can’t break the bank. But businesspeople and advocates note that New York has not used any of the millions of COVID relief money from Washington, D.C. to help pay off that interest, even though more than 30 states that have also borrowed money did.

“New York’s elected leaders had the opportunity to stop these surtaxes from reaching business mailboxes by using billions of dollars in federal pandemic aid to pay down insurance debt. state unemployment and interest owed on debt,” said state spokeswoman Ashley Ranslow. Office of the National Federation of Independent Businesses. “Instead, the state has sidestepped its responsibilities and left hard-working small business owners to foot the bill.”

The valuation, they say, is an insult to injury and another cost New York traders must bear that those in other states have avoided.

“You might say $27.60 isn’t much, but unemployment insurance premiums have already gone up significantly,” noted Ken Pokalsky, vice president of the Business Council of New York State. “It’s also in addition to other things that have increased significantly.”

“They thought they paid their taxes and now they owe more,” Pokalsky said, adding unemployment insurance premiums will likely rise next year, as they have this year.

“It’s worrying because of the feeling that businesses will swallow it, no problem,” remarked Peter Elitzer, who operates Peter Harris discount clothing stores in the capital region and Label Shopper stores in several other states. “We don’t have a lot of room to say, ‘Well, we’re just going to raise our prices to cover expenses,'” he said.

Elitzer has clothing stores in a number of other states, including Vermont, Indiana, West Virginia, North Carolina, Michigan, and Ohio, and only New York charges an interest assessment.

His company employs about 250 people in New York, out of 600 in total.

“Their budget is flooded with extra money and they’re trying to get another indirect way to get more corporate taxes,” Elitzer added, referring to the state’s $220 billion budget that was inflated this year with federal money for pandemic relief.

“We are disappointed that New York State has not utilized COVID relief funding, especially as we face high inflation and a potential recession. This is not the first time this has happened and we fear it could last for several years,” added Erica Komoroske, spokeswoman for Stewart’s Shops convenience stores, which have about 5,000 employees in New York.

At $27.60 each, that’s a $138,000 bill for interest assessment.

Tracy Snell, who runs Snell Septic Service in Greenwich, Wash., with her husband, has five employees, so their interest assessment surcharge is just $138.

But that comes with an increase in workers’ compensation and regular unemployment insurance payments, which add up to more than $7,000 a year.

Additionally, Snell’s business did not shut down at the height of the pandemic. They were considered essential workers and the closure of the municipal sewage company would obviously pose a lot of problems for people.

“We didn’t get anything because we were still working,” she said of various federal funds meant to keep people working.

“Pay interest”

New York has previously borrowed money from the US Treasury to meet its unemployment benefit obligations, including the years following the 9/11 attacks and the 2008 financial crisis. Loans after 2008 do not were fully reimbursed only in 2015.

Lawmakers have taken notice, although they offer different approaches.

State Senate Republicans, who are in the minority, recently called on Governor Kathy Hochul to suspend the collection of assessment money.

“Putting this financial burden onto New York businesses…when many are already facing increased operating costs is unconscionable,” said Western New York Senator Pat Gallivan, a committee member. work.

North Country Democratic Assemblyman Billy Jones also called on the state to intervene.

“What we’re advocating here is that New York State provide money to at least pay the interest on this debt so it’s not passed on to our small business owners,” he said. -he declares.

Hochul spokesman Justin Henry said “our office is closely monitoring the Unemployment Insurance debt in close coordination with the Department of Labor.” Henry said the state has funded more than $1 billion in COVID recovery programs. A lot of that is federal money.

Some, however, believe federal COVID relief funds should be used for other purposes, such as rehiring local government workers who have been laid off over the past decade.

“Using (US bailout) funds to pay down UI trust fund debt accrued in the past also takes away money that could be used in the present to support public employment and strengthen public goods and services,” the progressive Economic Policy Institute concluded in a study on the issue last year.

American Rescue Plan is federal legislation passed in 2021 to help communities, local and state governments, and individuals and businesses pay some of the costs of the pandemic. Business advocates believe some of that money should have been spent on interest payments.

Assembly Speaker Carl Heastie said he believes the federal government, rather than the state, should contribute to the interest costs.

Not all states had the “crisis level” that New York had, with its lockdowns, the Democrat recently said.

“I believe the federal government should pick up that expense,” Heastie said.

Either way, it was and remains a big expense.

According to the state Department of Labor, New York owes the federal government $162 million in interest alone for 2022.

[email protected] 518 454 5758 @RickKarlinTU

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John A. Bogar