Bernadette O'Leary 212-312-3523 (EDC)
MAYOR GIULIANI ANNOUNCES CITY WILL PREPAY UNEMPLOYMENT INSURANCE AS PART OF STATEWIDE EFFORT TO TRIGGER 1998 RATE REDUCTIONS
Mayor Encourages All Businesses To Prepay First Quarter 1998 Unemployment Insurance -- Plan Will Save City Businesses $170 Million
Mayor Rudolph W. Giuliani today announced that the City will prepay $2.3 million in unemployment insurance reimbursements as part of a statewide effort to trigger significant rate reductions for 1998. The City's action could lead to the largest decline in the unemployment insurance tax rate in seven years and will help New York City businesses save $170 million and statewide businesses $400 million.
New York businesses pay unemployment insurance taxes into the State's Unemployment Insurance Trust Fund. The size of that trust fund at the end of any given year determines the level of unemployment insurance taxes for the following year. If that trust fund is over $930 million at the end of 1997, unemployment insurance taxes will go down for thousands of businesses in New York.
"New York City businesses are expected to gain about $170 million next year if the Unemployment Insurance Trust Fund reaches $930 million," said Mayor Giuliani. "That's a savings of approximately $63 per employee for most private sector businesses. I strongly encourage all City businesses to help us reach this goal by prepaying their first quarter unemployment insurance. A concerted effort can save companies millions of dollars and help us create an even stronger economy for New York City."
Under State law, the unemployment insurance rate decreases as the Unemployment Insurance Trust Fund increases. If the year-end balance of the fund is at or above two percent of the aggregate taxable wage base -- or approximately $930 million -- rates automatically go down. According to the State Labor Department, the final level of the Unemployment Insurance Trust Fund remains uncertain because benefit charges are still expected to be debited and not all payments resulting from prepayment pledges have been received. The City is asking employers to prepay at this time to help ensure the fund will reach its goal so that 1998 rates can be reduced.
"The Mayor's decision to have the City prepay its share sends a message to businesses throughout the City that now is the time to pay if you want to benefit in the new year. We strongly encourage all private businesses to take advantage of this opportunity," said New York City Economic Development Corporation President Charles Millard.
The current health of the State's Unemployment Insurance Trust Fund is reflective of the State and City's improving employment situation. According to unemployment data released this afternoon by the New York State Department of Labor, the City's unemployment rate was 8.7 percent in November 1997, compared with 9.1 percent in October 1997. In addition, New York City's initial claims for unemployment insurance declined for the first ten months of 1997. The number of new claims filed through the end of October averaged 7,500 per week. In the first 10 months of 1996, the average weekly initial claims were 8,100.
For more information on the prepayment of unemployment insurance, contact Beverly Session Kelly at the Department of Citywide Administrative Services at 212-487-6653.
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