New York proposes $165 million for unemployment insurance debt

New York Governor Kathy Hochul's proposed budget for fiscal year 2026 includes $165 million to cover interest payments on the state's $6.4 billion unemployment insurance debt. This debt has only decreased by $2 billion over the past two years. Employers paid $3 billion in unemployment taxes in 2024, which was only slightly more than the benefits paid out. At this rate, the debt may not be fully repaid until 2030. Critics argue that the governor's proposal does not adequately address the underlying issues of the unemployment insurance system. The state’s unemployment benefits have fallen below the national average, and the system is seen as underfunded. There are calls for comprehensive reforms to ensure fair tax contributions from large employers and to improve benefit levels for workers.