— This story first appeared in New York Focus, a nonprofit news publication that investigates New York state politics. Sign up for their stories at nysfocus.com/newsletter.
In the latter part of the legislative session, Gov. Kathy Hochul’s administration pushed back a bill aimed at providing relief to New Yorkers who owe money to the state after receiving too many benefits.
As New York Focus reported in May, the state Department of Labor is demanding repayment of state unemployment benefits more aggressively than any other state, even though the federal government has encouraged leniency.
The bill proposed by State Sen. Brad Hoylman-Sigal would create a waiver program to forgive overpayments when they are the fault of the government or an accident of the claimant. It would also establish a clear definition of unemployment fraud that does not apply to recipients who have made honest mistakes, and require the Department of Labor to assess whether clawing back benefits would be contrary to “fairness and propriety.” awareness “.
But reform efforts face a potential obstacle: New York state’s nearly $7 billion debt to the federal Department of Labor.
The impasse has discouraged advocates, who insist the bill will have no impact on the debt.
“There’s no fire, but people are running around screaming that there is,” said Ciara Farrell, an attorney with the New York Legal Assistance Group.
Over the past two years, a coalition of advocates has worked with the state Department of Labor to iron out loopholes in the law. After several rounds of amendments, they thought they would finally have the green light from the labor authorities. But after the bill passed the Senate Labor Committee, advocates said, financial officials began expressing more concerns in late May about whether it could trigger a hostile federal response.
New York faces its own reimbursement problem. Rising Covid-related unemployment forced the state to borrow more than $10 billion from the federal government to keep the safety net program operating at a time when taxes could not support the insurance trust fund. state unemployment. The State has gradually repaid part of this sum, but the bulk of the debt remains.
When the bill was submitted to the Senate Finance Committee, officials from the Budget Division and the Ministry of Taxation and Finance began raising concerns to the Senate Finance Committee that the government The federal government could impose additional fees on New York employers if the state passes legislation that could make its unemployment deficit worsen, according to advocates familiar with the discussions.
“A TOTALLY SEPARATE QUESTION”
The Budget Division and the governor’s office did not respond to questions for this story. According to correspondence viewed by Hoylman-Sigal staff, the state Department of Labor also participated in discussions with budget officials, raising questions for advocates about whether the agency continues to fight the bill behind the scenes.
“Central…
