In the 1990s, the Pataki Administration brokered a deal between "business" and "labor." Unemployment insurance taxes were cut and unemployment payouts were raised, an "everybody wins" deal. Those who became unemployed and stayed unemployed in a booming economy when just about everyone was working got more money. And employers who were getting ready to lay people off and leave the state paid less in.
The only problem — New York was one of two states which failed to follow the guidelines of the U.S. Department of Labor and build up a big trust fund for hard times. Then the future arrived, and the state had to borrow from the federal government to pay benefits, and impose a massive unemployment insurance tax increase to pay it back, in a recession at the worst possible time. Those who left the state, of course, didn't have to pay the tax, but anyone dumb enough to start a new business here when we needed them most did.
So did anyone learn their lesson? The state is finally out of the red, the New York Times reports. So the National Employment Law Project is calling on Governor-elect Eliot Spitzer to increase benefits, while a Pataki Administation spokesman is saying "we have always felt that under the Pataki administration we should keep more money in the hands of employers." It sounds like the same deal is possible all over again! Meanwhile, the state has just a small fund in the bank and, depending on how the housing bust affects the overall economy, a recession could be just around the corner!
My advice: jack up unemployment insurance taxes while times are good, but keep benefits where they are, in order to raise that fund balance to the suggested level or more. In the next recession, if there is plenty of money in the fund to reduce taxes — as an incetive to start businesses here — and increase benefits — because there are few alternatives to unemployment, then do so.
One of the things I want to see change on Day One is the instant gratification, damn those stupid enough to stay here culture. That means saying "no" to everyone with their hands out when the money is rolling in. It would be nice to live in a place with a responsible state government. Can we at least be something other than the most irresponsible?