Businesses Shouldn’t Foot The Bill For State Government’s Incompetence

New York’s business community has every right to be upset with state government right now.

Unemployment claims skyrocketed after Gov. Andrew Cuomo used his legislature-given executive powers to order entire segments of the state’s economy to close during the COVID-19 pandemic. There were so many claims the state had to take out a $10 billion loan from the federal government to satisfy the claims and help the people whose jobs and livelihoods Cuomo had snatched away. Of course, that increase in claims led to higher unemployment costs for businesses and now an additional fee to help pay off the federal loan.

As if that wasn’t enough, last week Comptroller Thomas DiNapoli issued an audit that estimated $11 billion in Unemployment Insurance fraud because the state’s decrepit unemployment systems couldn’t handle the flood of claims, leading state workers to try to work around the system’s limitations and approve claims that were either far too high or shouldn’t have been given in the first place.

That’s right, more money was stolen through the state’s neglect than was borrowed from the federal government in the first place.

At a time when many businesses are worried about a possible recession and what that might mean for their businesses, they are dipping in to already slim operating margins to pay higher unemployment costs to the state.

The sad thing is the entire mess was avoidable. The state could have updated its unemployment insurance system in the early 2010s when DiNapoli warned that the system was poor. The state could have implemented fraud protection systems as DiNapoli warned in the mid 2010s. And when the state was flush with federal stimulus money it could have paid back a big chunk of the federal Unemployment Insurance loan so the burden didn’t fall on businesses.

Of course none of that happened.

But perhaps the most galling part of the story is the constant stonewalling on the part of Roberta Reardon, state labor commissioner. Not only has she refused to answer questions from state legislators about pandemic-related unemployment fraud, she stonewalled and delayed answering DiNapoli’s questions. That meant DiNapoli’s audit was delayed until after the election — a close race where such revelations could have made a difference. Democrats hold all the cards here. Those who failed so miserably in their jobs for more than a decade to allow this situation to occur should lose their positions. That won’t happen, though, because it would mean every Democrat office holder who approved frivolous spending at the expense of updating the state’s unemployment system would be out on the streets hoping the broken system they neglected for more than a decade works properly for them.

At the very least, the state should be reprogramming some of its rainy day surplus to lessen this state-imposed hit on businesses. It was bad enough to put employers on the hook for Cuomo’s COVID-19 closures. It’s even worse to hand businesses a bill for the state’s utter incompetence running a government.


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