Broke! New York State Runs out of Unemployment Funds

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(CNN)New York has to borrow money from the federal government to pay its state unemployment benefits after more than a million newly jobless residents filed claims amid the coronavirus pandemic, Gov. Andrew Cuomo said Monday.

“That’s why the federal government has to provide funding — because we don’t have the money,” Cuomo, a Democrat, said in a press briefing.
However, New Yorkers are not in danger of losing their benefits. The state is responsible for paying its share of weekly payments, which last up to 26 weeks, and can turn to the federal government for loans if its unemployment trust fund runs out.
The state has applied for and is guaranteed to receive a $4 billion, interest-free loan from the federal government, officials said. It operates like a line of credit so the state can draw down as needed.
The Empire State has processed 1.4 million initial unemployment applications and paid out $3.1 billion since March 9, including the $600 federally funded weekly boost that Congress approved last month as part of its $2 trillion relief package, according to the state Department of Labor.
Cuomo also highlighted that the state is running a budget deficit of between $10 billion and $15 billion, due largely to the outbreak walloping state tax revenue. Cuomo, along with other governors, has asked Congress to provide more federal aid to state governments.
But Senate Majority Leader Mitch McConnell said last week that Republicans are not interested in “revenue replacement for state governments” or “solving their pension problems.” Instead, he suggested allowing states to declare bankruptcy. Democratic congressional leaders, however, have said they will press ahead with yet another relief package that includes funding for state and local governments.


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