A debate over a $95 million interest payment to the federal government has picked up steam in recent days, with Gov. Andrew Cuomo saying today that the state’s uncertain fiscal situation prevents it from being able to pick up the tab.
It all stems from the state’s unemployment insurance fund, which has dwindled as unemployment rates have stayed high over the past three years. In 2009 and 2010, the federal government extended interest free loans to states, including New York, that needed money to cover its claims, but Congress hasn’t acted on a similar program this year.
That means the state owes the federal government $95 million by the end of September, and businesses across the state have been receiving notices from the Department of Labor with a bill of up to $21.25 per employee to cover the costs.
Cuomo was on the receiving end of a letter from Assembly Minority Leader Brian Kolb, R-Canandaigua, suggesting that the state use its surplus tax receipts to pick up the tab. According to Comptroller Thomas DiNapoli, tax receipts for the first quarter of 2011 exceeded expectations by nearly $800 million, though he still said the state’s fiscal situation is “tenuous.”
The governor, however, said today that Kolb’s proposal isn’t possible. He pointed out that the state is projected to face a $2.5 billion budget gap for the 2012-13 fiscal year, and spending a tax surplus would make that gap tougher to manage.
“The state is not in position to pay,” Cuomo said in Schenectady today. “Remember, when this state closed the budget, we had a roughly $2.5 billion deficit for next year. So we’re not out of the woods for next year. So we have a lot of work to do and we certainly don’t have a lot of time.”
In an telephone interview today, Kolb still said he’s not convinced that the state can’t use the tax revenue to close pick up the unemployment tab.
“I expected him to say that,” Kolb said. “I disagree with him, and that’s a respectful disagreement. I think this is a convenient way to try to make more money to play with in next year’s budget. I believe that we can close that $2.5 billion deficit, and our tax receipts are ahead of the game.”
“Basically, what they’re saying is we want to bank more tax receipts for budget negotiations next year, and if they get the businesses to pay for that, it’s $95 million more they can play with in next year’s budget,” Kolb continued.
Here’s Kolb’s letter to Cuomo: