New York seeks $4B loan from US to cover unemployment tab
New York has applied for a $4 billion federal loan to help cover the ballooning cost of unemployment benefits amid the coronavirus crisis, officials said.
The Empire State could use the interest-free line of credit from the federal Unemployment Trust Fund to pay for unemployment insurance benefits as needed over time, a state official said Tuesday.
“All benefits, including enhanced benefits, are being paid, and to help ensure it remains that way the state has applied for an up to $4 billion, no-interest federal loan,” state Labor Department spokeswoman Deanna Cohen said in a statement.
New York’s tab for unemployment benefits has exploded as the pandemic put hundreds of thousands of New Yorkers out of work during a statewide lockdown aimed at curbing the spread of the virus. As of Monday, the Labor Department had paid $2.2 billion in unemployment benefits to 1.1 million people since the start of the crisis, officials said.
Officials say New York is not in immediate danger of running out of money to pay those claims. But the state used up about half the money in its unemployment insurance trust fund from late February to mid-April, according to The Wall Street Journal, which first reported on the loan application Monday.
Officials also scrambled to revamp New York’s unemployment insurance application after some workers reported waiting weeks to file a claim through the overwhelmed system.
The Labor Department has slimmed its backlog of application phone calls to just 4,305 from 275,000 as it deployed more than 3,100 staffers to field unemployment benefits inquiries, officials said Monday.
The agency also launched a new application Monday that allows workers to apply for either unemployment insurance or “Pandemic Unemployment Assistance,” a benefit the feds created for independent contractors and other people who aren’t usually eligible for regular unemployment benefits.
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