New York s Small Business Crisis: Addressing $6 Billion Unemployment Insurance Debt

The decline of small businesses in New York has become a pressing issue, prompting calls for state leaders to address the situation, particularly the state’s $6 billion unemployment insurance debt. At a recent public hearing, Empire State Development officials reported that the number of small businesses has decreased by at least 3% annually since 2019, with some lawmakers suggesting the decline may be even more significant.

Assembly Small Business Committee chair Carrie Woerner emphasized the need for the state to use its rainy day fund to pay off the unemployment debt, arguing that doing so could reduce the necessity for various economic development programs. She pointed out that failing to act could hinder small business growth in New York, unlike other states that have taken steps to alleviate such debts.

The discussion included the substantial costs associated with workforce development programs, with lawmakers aiming to prioritize the unemployment debt repayment in the upcoming budget, despite existing budget deficits. Assemblyman Al Stirpe criticized the state for not taking sufficient action, claiming that legislative efforts have often been met with indifference from the executive branch.

Ashley Ranslow from the National Federation of Independent Businesses noted that small businesses pay between $400 and $450 per employee annually for unemployment insurance taxes. She criticized the state’s response to the debt, indicating that had there been timely allocations, the current situation would not be so dire. However, state officials countered this assertion, suggesting that the reported costs only represent interest on the debt.

Despite the emergence of approximately 24,000 new businesses in the past year and a half, lawmakers pointed out that this growth does not offset the overall decline. Business leaders expressed frustration over the state’s focus on loans rather than grants or tax incentives for smaller enterprises, which often face more financial challenges.

Additionally, the state’s film and TV tax credit program came under scrutiny for its costs and perceived lack of sustainable benefits. Critics highlighted that the program, which costs $700 million annually, does not provide a favorable return on investment compared to other initiatives. However, ESD officials defended the program, stating it generates significant employment opportunities and revenue for the state.

With the expiration of the Minority and Women-Owned Business (MWBE) certification program approaching next year, lawmakers also raised concerns about the challenges businesses face in obtaining and renewing their certifications. ESD officials committed to addressing these disparities in collaboration with the Legislature.

As New York navigates its economic landscape, the focus on unemployment debt repayment and reevaluating support structures for small businesses will be crucial in fostering a more favorable environment for entrepreneurship and economic growth.

Leave a Comment