The federal government should waive the interest on the billions of dollars in unemployment debt New York accrued during the start of the COVID-19 pandemic, Gov. Kathy Hochul on Friday said. 

In the meantime, the interest on the debt from the unemployment insurance benefits will be shouldered by employers in the state, with an increase taking effect in the coming weeks. 

"We're asking the federal government to waive the interest on these loans," Hochul told reporters on Friday. "We think they should. This was an unexpected occurence — literally a pandemic." 

New York's joblessness sharply increased during the initial weeks of the pandemic as businesses, schools and public gathering spaces shuttered. The resulting unemployment costs are still lingering, however, as businesses and employers face an additional surcharge per employee based on the debt outstanding. 

"We don't want any additional costs and we've been giving a lot of support to our businesses, a billion dollars to pay off those costs," Hochul said.  

The expectation is the additional money will be paid off by 2026. 

Business organizations have urged the state to pay down the interest itself, a cause taken up by Republicans. 

"There needs to be a plan to be able to bring this back under control in a few years," Republican candidate for governor Lee Zeldin said. "It should never been placed on small business owners in the first place.  We have to be able to get this balance paid off quickly. We still have money that can be used to pay off this balance."