Rochester Business Journal: One less burden for businesses: NY to pay off unemployment insurance loan debt

May 6th, 2025

Kevin Oklobzija//May 6, 2025//  – Read here.

Businesses across New York no longer will be saddled with paying down the state’s federal unemployment insurance loan debt.

With both business owners and labor proponents initiating over the weekend what Sen. Harry Bronson (D-Rochester) termed a “full-court press,” Gov. Kathy Hochul on Monday agreed to tap into a budget surplus to pay off the $6.2 billion loan balance.

The debt has accrued since the COVID-19 pandemic, when New York exhausted its Unemployment Trust Fund and borrowed $11 billion from the federal government to pay a tidal wave of unemployment claims.

Ever since, the state has assessed businesses a surcharge to pay down the debt while unemployment insurance rates also rose because of that deficit. That meant New York businesses paid an average of $400 per employee per year because of the loan balance, according to the National Federal of Independent Business.

The loan payoff, pushed hard in the Assembly by Bronson and Speaker Carl Heastie and in the Senate by Pam Helming (R-Canandaigua), will alleviate that burden and also allows the state to raise unemployment benefits from $504 per week to $896 starting in October. It becomes official with passage of the state budget.

“This is a really important measure for all businesses, small and big, because of the burden that has been placed on them to pay down this debt over the last few years, plus pay interest with special assessments,” said Bronson, chair of the Assembly’s Labor Committee.

Had the loan not been repaid, the surcharge on businesses would have doubled because the debt was entering a fifth year, Bronson said.

“This will bring the businesses of all sizes throughout our state much-needed relief,” Bob Duffy, president and CEO of the Greater Rochester Chamber of Commerce, said in a prepared statement. “The massive cost savings associated with this will promote deeper investment in our communities and help businesses weather the storm of uncertainty at the federal level.”

That includes the Rochester Chamber. With 37 employees, the organization was required to pay more than $8,000 toward the UI loan debt.

While unusual for Albany, this measure also had bipartisan support.

“Businesses, including small businesses and family farms, have been shouldering the burden of New York’s massive unemployment insurance debt for years,” Helming said. “I introduced legislation and long advocated that the state should repay this debt, and I’m pleased there is an agreement to get it done in the budget.

“It’s our job to support job creators. If we truly want to help our local employers grow, we must continue to take steps to reduce the cost of doing business in New York State.”

The payoff, however, comes far too late for Don Swartz, who recently sold his restaurant, Veneto Wood Fired Pizza and Pasta, and two adjacent bars on East Avenue.

“The increasing unemployment insurance costs was one of the nails in the coffin,” Swartz said. “We didn’t want to do it, but how much can you charge for eight ounces of pasta and a little red sauce?”

The relief will be welcomed by those who continue to operate businesses in New York. Justin Wilcox, executive director of Upstate United, called it “a major victory for businesses and business owners statewide.”

The loan balance is approximately $6.2 billion, but the total amount allotted to the Unemployment Trust Fund will be $8 billion. Creating the surplus within the fund was intentional, since the economic forecast is far from rosy, Bronson said.

The repayment also will enable the state to take out another loan that would be interest-free for two years, should it be necessary. If the pandemic-era loan was still in place, any additional borrowing would require immediate interest payments.

“If we didn’t pay this off and the economy tanks, which a lot of people think it’s going to, and we had to borrow more money, that’s not considered a new borrowing,” Bronson said. “Now, if we do have to borrow again, you get two years of interest-free borrowing.

“So there’s all sorts of reasons why doing it now makes a lot of sense.”

Laid off workers also will benefit. New York’s maximum unemployment benefit had been frozen at $504 because of the loan.

“By statute, the maximum unemployment benefit increases each year, unless there is a loan from the federal government,” Bronson said. “Any loan prevents a state from increasing the benefit rate.”