“That is why the federal authorities has to supply funding — as a result of we do not have the cash,” Cuomo, a Democrat, stated in a press briefing.
The state has utilized for and is assured to obtain a $four billion, interest-free loan from the federal authorities, officers stated. It operates like a line of credit score so the state can draw down as wanted.
Coronavirus upends the nationwide financial system
New York is just not the one state on this state of affairs, neither is this the primary time states have turned to the federal authorities for assist throughout an financial downturn.
California has additionally been permitted to borrow from the federal authorities to pay its state advantages, a spokeswoman for the state Employment Improvement Division stated final week. It has processed 3.2 million claims and paid greater than $Three billion over the six weeks ending April 18, together with the $600 federal enhancement.
Six states — together with California, New York, Texas and Ohio — can solely fund as much as 10 weeks of advantages earlier than they will have to show to the federal authorities or different sources for infusions, in accordance with estimate earlier this month from the Tax Basis. Texas stated it could should request a loan by mid-Could, whereas Ohio stated its belief fund may final so long as eight weeks.
Many states have been shortchanging their unemployment insurance coverage belief funds for years, partly as a result of they have been reluctant to boost taxes on companies.
The Nice Recession walloped the belief funds, although the job losses had been far much less extreme and had been unfold out over extra time. Nonetheless, an unprecedented 35 states and the Virgin Islands needed to borrow cash from the federal authorities to pay claims.
The loans totaled a file $42 billion by the top of 2010. Employers in most of those states ended up paying increased taxes to cowl the debt.
The impression lingers for some. Ten states in the reduction of the period of their unemployment applications to as little as 12 weeks to scale back future obligations. (A minimum of three of these states returned to 26 weeks throughout the pandemic.)
And never all states have sufficiently replenished their belief funds much more than a decade later, stated Christopher O’Leary, senior economist on the W.E. Upjohn Institute for Employment Analysis.
CNN’s Elizabeth Joseph contributed to this story.
