Businesses in New York will struggle with billions of dollars in federal unemployment insurance debt hanging over their heads and will have a hard time recovering from the COVID-19 pandemic, Assemblyman Billy Jones warned on Monday. 

Jones is among the lawmakers sounding an alarm over the last several months surrounding New York's debt to the federal government to the Unemployment Trust Fund. The state borrowed billions of dollars at the onset of the pandemic as public gathering spaces and businesses were forced to close and the unemployment rate spiked. 

New York now owes $7.6 billion to the fund, second only to California and is one of six states that are yet to pay off its debt. Businesses will be on the hook to help pay down the debt with what amounts to an interest charge set to take effect later this year. 

“Local businesses are just now starting to recover from the losses they experienced due to the pandemic,” Jones said. “Now is not the time to charge an Interest Assessment Charge or increase their tax rates to help pay off the state’s debt to the federal government. The businesses that were forced to close shouldn’t be punished, and the ones who were able to stay open or keep their employees on payroll shouldn’t be burdened with the state’s debt."

Business organizations and a bipartisan group of state lawmakers have urged the state to pay down the remaining debt load in order to provide some relief to employers. 

Comptroller Tom DiNapoli in June warned employers in New York will face a "burdensome" increase in costs that could hinder the state's economic recovery. For businesses, the added costs come as they are also dealing with rising prices due to inflation. 

Lawmakers have proposed a variety of sources for New York to pay down the remaining debt, including leftover federal funds and mobile sports gambling revenue.