As the state’s small businesses steadily decline, lawmakers and business experts are calling on state leaders to take action in the next legislative session, starting with paying down New York’s $6 billion unemployment insurance debt. .
Empire State development officials told lawmakers at a hearing Tuesday that the number of small businesses in the state has declined by at least 3% annually since 2019. Lawmakers said the number is difficult to measure and is estimated to be much higher.
The state’s $6 billion in unemployment insurance backlog due to the pandemic continues to hold back small businesses.
“We have so many economic development programs that provide loans and grants. And the question I ask is, ‘Do I have to do significantly more just to pay off this UI debt? ”’ said Werner, chairman of the Congressional Small Business Committee.
Woolner wants the state to use rainy day reserves to pay off outstanding unemployment balances and attract more small entrepreneurs.
“There is a real cost to our inability to do what every other state has done,” she said.
The state spends billions of dollars each year on workforce development programs to foster economic growth. Lawmakers held a public hearing Tuesday in Albany to measure economic impact and return on investment.
Legislative leaders have had to negotiate large budget deficits, including blocking the Metropolitan Transportation Authority’s capital project after Gov. Kathy Hochul ended congestion pricing in June. Still, he said paying down the state’s unemployment debt will be a top priority in the next budget.
Congressman Al Starpe, who chairs the Economic Development, Job Creation and Commerce Committee, criticized the state’s inaction.
“I think we’ve been ignoring this issue,” Stap told Spectrum News 1. “Congress has done everything possible since Sunday to come up with some kind of relief package, but the executive branch seems to be reluctant to do so for some people.” Reason. “
A spokesperson for Hochul’s office said the state will continue to monitor the federal unemployment insurance trust fund and reduce the state’s principal balance where possible.
“We expect to make progress every year until it pays off,” they said.
Ashley Ranslow, New York state director for the National Federation of Independent Business, said in testimony that small businesses in the Empire State pay an average of $400 to $450 per year in unemployment insurance taxes per employee.
“We should have been doing this for the last three years,” Ranslow said. “If we had allocated a billion at a time, we wouldn’t have been in such a dire and difficult situation.”
State officials dispute that figure, citing Department of Labor data that says unpaid wages cost New York state employers about $15 per employee.
Ranslow said the $15 applies only to interest and does not include state UI tax brackets or federal unemployment trust fund adjustments. This amount equates to more than $400 on average for businesses in New York.
“The debt has been paid down in recent years because of tax increases, not because the state did anything,” Ranslow said.
Empire State Development President, CEO and Secretary Hope Knight told lawmakers that at least 24,000 new businesses have started in the state in the past year and a half. . Lawmakers counter that the decline is not greater than the annual decline.
Stap said the state funds some programs that don’t provide a significant return on investment. Several business leaders criticized the state for primarily funding loans to small businesses, reserving most grants and tax-incentive programs for larger businesses.
“Loans are great if you’re expanding your business or starting a new business, but they’re not great in terms of the same profit, because it’s money that you have to pay back, and you don’t have to pay interest. Because you have to pay it back, even if interest rates go down,” Ranslow said.
Citizen groups and other business experts have blasted the state’s $700 million annual film and television tax credit, totaling more than $7 billion through 2034.
Mr. Knight disputed data from the state Department of Taxation and Treasury showing that, at most, the benefit from tax credits is 31 cents on the dollar.
“Regarding the report compiled by Tax and Treasury, we take issue with some of the methodology used,” Mr Knight said.
She added that the credit would generate $1.70 in tax revenue for every dollar spent, according to ESD data.
“The film industry is a huge opportunity for New York,” Knight said. “We believe this is a critical industry to New York’s economy as it creates 65,000 job opportunities annually.”
Critics argue that the television and film industry provides temporary jobs to the state and does not support a sustainable economic development model.
The state’s program to certify minority- and women-owned businesses (MWBEs) is set to expire next year.
Several council members told Knight they often hear from businesses in the district that they are having trouble getting certified, or that they are experiencing problems and delays in renewing their certification.
Knight said the agency will work with Congress to address disparities within the program in the next legislative session.
