Since the first business day of the new year, New York State has borrowed around $90 million a week from the federal unemployment trust fund to pay state unemployment claims. The State's unemployment insurance system has run out of money despite paying lower benefits per resident than its peers. The trouble is both a tripling in unemployment claims from last year, and insufficient payroll taxes (which fund the system). New York is already facing a $212 million deficit, and that deficit is expected to be $2.5 billion in about 2 years. Borrowing from the federal government provides cash for the claims now, but could end up costing New York millions in interest later on.
See "New York Borrows to Pay Jobless Claims", Patrick McGeehan, The New York Times, January 21, 2009