On February 25 Governor Chris Christie proposed to cut benefits for the unemployed and shield employers from tax hikes that have been used to make up the difference in the underfunded unemployment system.
The proposals need to pass the state Senate and Assembly, both controlled by Democrats, when they come up for vote later this month. Should they pass, the new system would go into effect in July.
Christie proposes that the state’s unemployed will have to wait one additional week before receiving benefits, that maximum weekly checks ($560) would be reduced by $50, and that restrictions get tighter on workers fired for misconduct. He also proposes to reduce tax increases on businesses.
Employers pay into the New Jersey Unemployment Insurance Trust Fund, which was long-ago set into action by the state legislature and, over the course of 15 years, depleted by members of both parties to the tune of $4.7 billion to pay for charity care and healthcare for the poor. But not unemployment benefits.
The reshuffling put the fund in a nearly $800 million hole — which was, by the way, the amount Christie pledged to trim from the state budget when he ran for governor — and put employers in a tough spot. State law dictates that if the fund gets too low, an automatic increase in employer contributions kicks in.
One increase kicked in early last year, to little positive effect. The state also has borrowed $1.2 billion from the federal government to ward off what could saddle employers with an obligation to pay as much as an additional $700 per employee next year. The average increase, according to the Christie administration, would be an additional $390 per employee per year.
Christie’s changes would limit that average to about $130 per employee per year, but the state still needs the same amount of money to operate properly, and Democrat lawmakers aren’t happy about where the balance would come from. Most Democrats have gone on the record to say that they dislike the proposals, as they shift the burden of taxation to a group of people who already rely on the state to pay them while they’re out of work. Republicans, on the other hand, applaud the effort, saying it is a tough, but necessary step to a more equitable budget for the state as a whole.