Another Voice: New York’s $9.6 billion hidden tax on consumers is coming

April 28th, 2022

The following op-ed was originally published in The Buffalo News on April 27, 2022

Given the staggering size of this year’s $221 billion budget, it stands to reason that Gov. Kathy Hochul and legislative leaders would have enacted some unemployment insurance relief for employers across the state. After months of intense advocacy efforts by our organization and allied partners in the business community, the state’s UI $9.6 billion crisis was widely recognized in Albany as a critical issue that required action.

And yet, despite the availability of billions in remaining federal aid and sensible guidance from Comptroller Tom DiNapoli, Albany’s leaders failed to deliver any UI relief.

Upstate employers – the vast majority of which are small businesses – were already struggling with supply chain issues, labor shortages and the state’s own harsh business climate. Now, they’re being hit with rising UI tax costs – by 200% already in some cases. By 2025, some employers will see their total UI tax payments increase by almost 254% compared to payments made in 2020. That’s unsustainable.

Those employers will have no choice but to pass at least $9.6 billion – New York’s current UI debt to the federal government – onto consumers.

Yes, you read that right: Albany has enacted a $9.6 billion hidden tax on consumers.

While this hidden tax will be spread out over several years, it comes at the worst possible time. With inflation currently at 8.5%, consumers across the state have been feeling the squeeze for months. Grocery costs are up 10%, and gasoline costs have risen by 48% over the last 12 months. By failing to tackle the state’s UI debt, Albany has driven up New York’s sky-high cost of living to new heights.

With less than six weeks left in the legislative session, we need Albany to take action. A bill sponsored by Sen. Anna Kaplan and Assemblyman Ken Zebrowski (S.6791/A.7788) would freeze UI rates for the next two years.

While this bill does not address the state’s $9.6 billion UI debt, it does provide much-needed relief to employers. Hochul and legislative leaders must prioritize and pass this important measure.

Additionally, Hochul must make good on her pledge to make New York the most business-friendly state in the nation by committing $2 billion for UI relief in next year’s budget. A new report from DiNapoli has already shown that tax collections are $3.3 billion higher than the Division of the Budget’s February forecast.

Employers clearly need UI relief and Albany clearly has the resources to tackle this crisis. The question now is whether Hochul will take this issue seriously and take action.

For the sake of New York’s consumers and small businesses, we certainly hope so.

Justin Wilcox is executive director of Upstate United in Brighton, N.Y.