MORE ROBBING PETER TO PAY PAUL INSTEAD OF MAKING THE NEEDED CUTS IN SPENDING…NYS IS SO CORRUPT, THEY SHOULD FILE BANKRUPTCY AND THEN CRIMINAL CHARGES SHOULD BE BROUGHT…IF A BUSINESS DID HALF OF WHAT THIS CRIMINAL STATE DOES, THEY’D BE OUT OF BUSINESS AND IN PRISON…..

Rochester-area employers are being told they must begin making interest payments on a debt the state rang up by borrowing from the federal unemployment insurance trust fund.

The surcharge amounts to $24 per employee, on average, meaning larger companies will have to make payments of thousands — even tens of thousands — of dollars.

“We knew this was coming down the pike,” said Eastman Kodak Co. spokesman Christopher Veronda. Kodak is one of the largest employers in the region with more than 7,000 local workers. “We haven’t crunched the numbers yet,” Veronda added, “but obviously this is something we wish we didn’t have to do.”

Small businesses aren’t happy about the extra payment, either. For them, every dollar counts in a tight economy.

“Small business hasn’t been laying people off and yet has to pay this additional cost,” said Pam Bauer, CEO and president of Abacus and Co., a Rochester accounting firm. “This problem of a depleted unemployment benefits fund has been clear for years. Yet nothing was done.”

The new payment is in addition to contributions that employers ordinarily make to the state and federal unemployment insurance funds. Notices of the surcharge are going out now, according to state Labor Department spokesman Leo Rosales.

Revenue from the surcharge will help the state meet an interest obligation of $115 million on $3.2 billion it has borrowed to pay unemployment benefits.

Jobless benefits are a shared federal and state obligation, with the state picking up the first 26 weeks of benefits and the federal government absorbing the cost for additional weeks.

There is no single tax obligation for local employers, as the amount of tax depends on how many former employees of a company are drawing benefits compared to what the employer contributes to the fund. The rate increases if the employer takes more from the fund than it puts in.

“The easiest path for the state is to take this from the employers,” said Brian Sampson, executive director of Unshackle Upstate, a Rochester-based business organization that lobbies for business interests in Albany. “We’d like the state to get the money elsewhere, but from where? We know the state’s indebtedness. This is why it can be so difficult to be an employer in New York.”

Other states also borrowed from the federal government, and the total amount of borrowing could reach $80 billion. The borrowing was authorized under the 2009 economic stimulus program, and rising joblessness in 2009 and 2010 led to wholesale borrowing from Washington.

Congress gave the states a break on repayment for two years. But as high national unemployment persisted, Congress extended jobless benefits several times, drawing down the federal fund. The federal government began demanding repayment from the states, and the clock started ticking Jan. 1. Debtor states face interest payments totaling $1.2 billion nationwide.

Rosales said the preferred course would be for Congress to approve another grace period. But there has been no movement in that direction in either house.

Congressional observers have said that House Speaker John Boehner, R-Ohio, may not address the issue of a waiver or delay until the latest round of benefits expires in September.

States other than New York have found different ways to meet the interest obligation. California, which owes $362 million on a debt of $9.7 million, plans to borrow from one of its own trust funds. Texas plans to float bonds, a tactic being followed by other states.

The insolvent state of New York’s unemployment insurance trust fund has been attributed by some to the failure of the state to raise the base wage rate on which each employer’s obligation is predicated. Too little money going into the fund over time led to a negative balance when unemployment spiked during the recession.

Additionally, because the state’s fund is insolvent, employers don’t qualify for sizable credits to defray the 6.2 percent tax they pay under the federal Unemployment Trust Act. Full credits won’t be reactivated until the state’s fund recovers. http://www.democratandchronicle.com/article/20110122/BUSINESS/101220321/State-hits-employers-with-new-charge-on-benefits