The New York business community has every right to be angry with the state government now.
Jobless claims skyrocketed after Gov. Andrew Cuomo used his executive powers conferred by lawmakers to order entire segments of the state economy to shut down during the COVID-19 pandemic. There were so many demands that the state had to borrow a $10 billion loan from the federal government to meet the demands and help the people whose jobs and livelihoods Cuomo had snatched away. Of course, that surge in claims led to higher unemployment costs for companies, and now an additional fee to pay off the federal loan.
As if that weren’t enough, comptroller Thomas DiNapoli released an audit last week that estimated unemployment insurance fraud at $11 billion because the state’s ramshackle unemployment systems could not handle the spate of claims, prompting state officials to shut down attempt to circumvent the system’s limitations and approve claims that were either far too high or should not have been made in the first place.
That’s right, more money was stolen from the government’s negligence than was ever borrowed from the federal government.
At a time when many companies are concerned about a potential recession and what that might mean for their business, they are resorting to their already tight operating margins to pay higher unemployment costs to the state.
The sad thing is that the whole mess was avoidable. The state could have updated its unemployment insurance system in the early 2010s when DiNapoli warned that the system was bad. The state could have implemented anti-fraud systems, as DiNapoli warned in the mid-2010s. And when the state was full of federal stimulus money, it could have paid back a large chunk of the federal unemployment insurance loan so the burden didn’t fall on the corporations.
Of course none of that happened.
But perhaps the most annoying part of the story is the constant blockade by State Labor Commissioner Roberta Reardon. Not only has she refused to answer questions from state lawmakers about pandemic-related unemployment fraud, she has blocked and delayed answering DiNapolis’ questions. That meant DiNapoli’s scrutiny was postponed until after the election – a close race where such revelations could have made a difference. The Democrats have all the cards here. Those who have failed so miserably in their jobs for more than a decade to allow this situation to happen should lose their positions. That won’t happen, however, because it would mean that any Democratic incumbent who authorizes frivolous spending at the expense of updating the state’s unemployment system would be out on the streets hoping to fix the broken system they’ve neglected for more than a decade , works properly for them .
At the very least, the state should reprogram some of its wet season surplus to lessen this state-imposed blow to business. It was bad enough to blame employers for Cuomo’s COVID-19 closures. Even worse is handing corporations a bill for the state’s utter incompetence in running a government.
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