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No, he just took advantage of the situation to
feather pockets of his friends and supporters.
REH
----- Original Message -----
Sent: Wednesday, January 29, 2003 12:01
PM
Subject: RE: [Futurework] smart or
dumb?
So Pataki had bought
into the myth that the new economy would never go south, eh?
-----Original
Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]] On Behalf Of Ray
Evans Harrell
Sent: Wednesday, January 29, 2003 10:26
AM
To: futurework
Subject: [Futurework] smart or
dumb?
State Unemployment Fund Is Operating in the
Red
January 29, 2003
By LESLIE EATON
New York
State's unemployment insurance fund ran out of
money last month, forcing
the state to borrow $418 million
so far from the federal government,
according to the New
York State Department of Labor. The state has told
the
federal government that it may have to borrow as much as
$760
million.
The automatic federal loan means that unemployment
benefits
for jobless New Yorkers are not at risk.
But it may prove
expensive, because the most recent loan,
on top of two last year, means
that the state will have to
pay interest on its borrowings, according to
the federal
Department of Labor. If it had not had to borrow money
at
the end of the year, New York would have avoided interest
charges of
6.3 percent on its $231 million of earlier
loans, the principal of which
has been repaid.
And if all the money the state borrows is not
entirely
repaid by November 2004, New York businesses face an
automatic
tax increase under Labor Department rules.
That would be on top of an
increase in state unemployment
taxes that this year will cost companies an
average of $50
more per employee, the state's Labor Department said.
The
increase, to an average of $360 per worker, is
automatically imposed
when the unemployment insurance fund
goes into the red.
Gov. George
E. Pataki, who presents his budget today, has
said he is opposed to
"job-killing taxes," and he has even
proposed small tax cuts or incentives
for businesses to
create jobs in New York.
Texas is the only other
state in the current recession that
has needed federal help to pay its
jobless benefits,
although Minnesota has signaled federal officials that
it
may need a loan.
New York State's unemployment insurance program
provides up
to six months of benefits for jobless people who
qualify;
the maximum payment is $405 a week. Congress recently
extended
a separate federal program that gives 13 more
weeks of aid to workers who
have exhausted their state
benefits before finding jobs.
Robert M.
Lillpopp, a spokesman for the state Labor
Department, said that "the
long-term devastating effects of
the World Trade Center disaster and the
continuing national
recession" are to blame for the fund's deficit.
Since September 2001, the state's unemployment rate has
climbed to
6.3 percent from 5.2 percent, seasonally
adjusted; the increase has been
even steeper in New York
City, where the jobless rate now stands at 8.4
percent, up
from 6.6 percent in September 2001.
As a result,
through mid-December of last year, the
unemployment trust fund paid out
roughly $650 million more
in benefits than it did in the same period of
2001,
according to internal fund documents supplied by the New
York
Unemployment Project, a frequent critic of the state's
jobless programs.
The project obtained the documents
through a Freedom of Information Law
request, said Jonathan
Rosen, an organizer for the group.
The
fund's revenues, too, rose last year, but by far less
than withdrawals to
pay benefits. Money from taxes climbed
by about $213 million; the state
also received $491 million
from a one-time federal distribution, some of
which went to
pay off the outstanding loans.
Mr. Rosen contends
that the fund's problems were caused not
simply by the sharp increase in
joblessness, but also by
the Pataki administration's decisions to
reduce
unemployment insurance taxes on businesses and keep the
fund's
reserves low compared with the reserves in the funds
of most other states.
"It's crucial that people understand that the state made
bad tax
choices, and that unemployed people are paying the
price," Mr. Rosen said.
Had tax rates remained at 1994
levels, he said, the state would have
billions of dollars
for benefits or services for the jobless.
The
money would also be available to cover more unemployed
workers, Mr. Rosen
said. Fewer than half of all New Yorkers
who lose their jobs receive
unemployment benefits, while in
Connecticut 75 percent do, and in New
Jersey the rate is 57
percent, according to an analysis by the
National
Employment Law Project.
But the Business Council of New
York State supports the
practice of keeping fund balances low, even though
its
members are now facing an automatic tax increase at a time
of
widespread economic sluggishness.
"In Albany, there is a strong and
never-ending temptation
to spend pots of money, even when it is earmarked
for other
purposes," said Matthew Maguire, director of
communications
for the council. As for extending or improving benefits,
he
said, "the Legislature always has options above and beyond
the fund
balances."
Given the huge deficits that the state is facing,
borrowing
from the federal government may be a sound move, said
Frank
Mauro, executive director of the Fiscal Policy Institute,
a
labor-backed research organization. But, he added, "It
shouldn't have
gotten to that
point."
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