Municipal Government

Unemployment is Draining the Economy

July 21, 2011
By Stephanie West

The recent national recession led to record high levels of unemployed workers receiving unemployment insurance benefits. As a result, since 2009 New York State has borrowed over $3 billion from the federal Unemployment Insurance (UI) Trust Fund. The American Recovery and Reinvestment Act (also known as the Recovery Act) provided interest-free loans to New York and other states with insolvent

Trust Funds during calendar years 2009 and 2010. Thus far, Congress has not extended the interest-free loan provisions into 2011. Thus, New York must pay approximately $95 million in interest on these loans to the federal government by September 30, 2011.

In order to pay the interest due for 2011 on these federal loans, New York State is required by state law to assess a temporary charge on employers, called an Interest Assessment Surcharge (IAS).  

New York’s Interest Assessment Surcharge rate for 2011 is 0.25%. Each employer’s surcharge amount is determined by multiplying the total taxable wages in the most recently completed payroll year (October 1, 2009 through September 30, 2010) by the IAS rate of 0.25 percent. Therefore, the maximum amount that most employers will be assessed is $21.25 per employee.

July 20, 2011

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