New York state's broke fund for paying unemployment benefits will soon lead to higher taxes for almost all employers - on the heels of extra fees that hit this summer.
New York, like more than half of U.S. states, borrowed from the federal government to pay unemployment benefits as demand soared in the recession.
New York began borrowing from the feds in January 2009 - and the state's fund isn't close to recovering. The state now owes $3.09 billion, behind only California and Michigan.
The state charged businesses a one-time fee of up to $21.25 per employee to cover $95 million of interest on the loans. The federal stimulus had waived interest payments for a couple of years, but that provision has expired and not been renewed.
New York submitted its interest payment on Thursday, the day before it was due, via a wire transfer to the U.S. Treasury Department.
A second wave of extra costs will hit by the start of 2012, in the form of higher federal taxes.
The federal government will raise its own unemployment taxes on companies in states that have not paid off their loan balances.
The federal government taxes the first $7,000 of wages earned by every employee each year.
The higher rates will boost taxes on companies by $21 per worker. Currently, the maximum tax per employee is around $56, according to the government.
Assembly Minority Leader Brian Kolb, R-Canandaigua, had called on the state to rescind its unemployment fee hike, to no avail.
U.S. Sen. Charles Schumer, D-NY, has introduced legislation to end the surcharge, refund businesses and waive interest costs again. The bill has not advanced in Congress.