senate Bill S2245

Amended

Relates to increasing the maximum benefit rate for unemployment insurance

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 13 / Feb / 2009
    • REFERRED TO LABOR
  • 23 / Mar / 2009
    • REPORTED AND COMMITTED TO FINANCE
  • 27 / May / 2009
    • 1ST REPORT CAL.489
  • 01 / Jun / 2009
    • 2ND REPORT CAL.
  • 02 / Jun / 2009
    • ADVANCED TO THIRD READING
  • 16 / Jul / 2009
    • COMMITTED TO RULES
  • 06 / Jan / 2010
    • REFERRED TO LABOR
  • 02 / Mar / 2010
    • AMEND AND RECOMMIT TO LABOR
  • 02 / Mar / 2010
    • PRINT NUMBER 2245A
  • 12 / Mar / 2010
    • AMEND AND RECOMMIT TO LABOR
  • 12 / Mar / 2010
    • PRINT NUMBER 2245B
  • 15 / Mar / 2010
    • REPORTED AND COMMITTED TO FINANCE
  • 25 / Jun / 2010
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 25 / Jun / 2010
    • ORDERED TO THIRD READING CAL.1285

Summary

Relates to increasing the maximum benefit rate for unemployment insurance.

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Bill Details

See Assembly Version of this Bill:
A4921
Versions:
S2245
S2245A
S2245B
Legislative Cycle:
2009-2010
Law Section:
Labor Law
Laws Affected:
Amd §§518 & 590, Lab L
Versions Introduced in 2007-2008 Legislative Cycle:
S8742, A11642

Sponsor Memo

BILL NUMBER: S2245 REVISED 08/03/09

TITLE OF BILL :
An act to amend the labor law, in relation to the unemployment
insurance law, increasing the maximum benefit rate for unemployment
insurance


PURPOSE :
The bill intends to increase the maximum weekly unemployment benefit
rate and restore fiscal health to the state's Unemployment Insurance
Trust Fund.

SUMMARY OF PROVISIONS :
Section one of the bill amends section 518 of the labor law to
gradually increase the taxable wage base for employer contributions to
the Unemployment Insurance Trust fund until 2012 after which the
Department of Labor would calculate the wage base needed to fund
annual increases for the maximum weekly benefit.

Section two of the bill amends section 590 of the Labor Law to
increase in the maximum weekly unemployment benefit rate to $475 as of
July 2009, to $525 as of July 2010, to $575 as of July 2011, to $625
as of July 2012, after which the maximum weekly benefit would equal
one-half of the state average weekly wage as annually calculated by
the State Department of Labor.

Section three establishes the effective date.

JUSTIFICATION :
New York's unemployment benefit rate and taxable wage base have not
been raised since 1998. The state's unemployment rate is now 8.7% and
more than 854,000 New Yorkers are out of work. Due to the large number
of persons filing for unemployment benefits, the Unemployment
Insurance Trust Fund has become insolvent. The state has had to borrow
from the federal government to pay benefits and will owe more than $2
billion by the end of the year. This deficit is expected to rise by
an additional $1 billion during each of the next few years if nothing
is done to address this problem. The limited amount of stimulus funds
provided under the American Recovery and Reinvestment Act of 2009
(ARRA) does not resolve this long-term crisis to the Trust Fund. Both
employers and the state will face significant new costs if the Trust
Fund is not restored to fiscal health. The continued insolvency of the
Fund will result in higher federal unemployment taxes for employers.
When the Fund is solvent, employers can receive a federal credit
reduction against the 6.2% federal tax they pay under the Federal
Unemployment Trust Act (FUTA), which reduces their tax liability to
.8%. When the Fund, however, lacks sufficient contributions to repay
borrowed money by the federal deadlines, the FUTA credit is reduced,
which increases the tax rate for employers. Without this legislation,
the increased tax cost to New York employers is projected to reach
$6.4 billion during the period of 2009 - 2018. The failure to
increase the taxable wage base will also cost the state millions of
dollars in interest on its federal loan. Although the ARRA waived some
interest for a brief period, New York will owe more than $200 million
in interest by 2011, which is projected to increase to $249 million
over the following five years. Under the bill, however, the state's
interest on the loan would continually decline until 2016, when the
Trust Fund's solvency would be restored. New York's taxable wage base
is significantly lower than most other states, including New Jersey
($28,900), Connecticut ($15,000) and Massachusetts ($14,000). The
legislation would also increase the maximum weekly benefit rate of
$405 which was enacted more than a decade ago. Since then, the
spending power of $405 has declined by more than 20% to approximately
$330. The current benefit rate is based on one-half of the state's
average weekly wage in 1998. If this rate were adjusted to the current
average weekly wage, the benefit would be closer to $575. The
legislation proposes a more modest increase in the initial years
following enactment in an effort to strike a balance between the need
to increase benefits and raise employer contributions. New York's
current benefit level places many unemployed workers and their
families below the poverty threshold. The state's weekly benefit rate
is much lower than that of nearby states including New Jersey ($584),
Connecticut ($519), and Massachusetts ($628). In June, Oregon raised
its unemployment benefits to $493. The need to raise unemployment
benefits and the taxable wage base grows more urgent each year.
Because benefits have not been increased, workers who have recently
received extended unemployment benefits from the federal government
have been deprived of additional income they and their families need
at this difficult time. The failure to act also hurts the economy
since every dollar provided to workers returns at least $1.50 through
local purchases for rent, food and other basics, which in turn helps
local businesses and generates tax revenues. The unemployment system
was established to help New Yorkers support themselves after they lose
their jobs through no fault of their own until they can find new work.
This legislation will protect New York's unemployment system by
ensuring the fiscal health of the Trust Fund, and in so doing, help
avoid new costs for employers and the state if solvency of the Fund is
not restored.

LEGISLATIVE HISTORY :
2008: S.8742 Referred to Rules; A.11642 Referred to Ways & Means.

EFFECTIVE DATE :
This bill will take effect immediately, provided that section one will
take effect 30 days after it becomes law.
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