TRENTON – The Senate passed by a vote of 37-0 bill S3819, which would reduce unemployment insurance tax rates. There was no discussion before the vote.
The tax rates would be reduced for employers during fiscal years 2012 and 2013, though it wasn’t immediately known by how much.
“That will result in the building up of UI fund reserves sufficient to reduce the likelihood that any future recession will result in the deep UI trust fund deficits which have caused such large employer UI tax increases during the current period of high unemployment,” the bill states.
Revenues for the State Unemployment Insurance (UI) Compensation Trust Fund are anticipated to fall by approximately $371.5 million in fiscal year 2012 and $281.4 million in fiscal year 2013, the years in which the tax cuts go into effect.
The state will make up the shortfall by borrowing more federal government funds, the bill states. The state is expected to pay back the feds more than $650 million in borrowed money, with interest.
The UI fund should be solvent again by 2014, according to the bill.
“Given the current economic climate, it is important that we take steps to aid businesses in New Jersey, particularly small businesses,” said Sen. Fred Madden, (D-4), Washington Township, chairman of the Labor Committee in a release afterward. “By cutting taxes on employers we are providing them a much needed break, while also sparing the unemployed from a reduction in benefits.”
The bill was one of many measures recommended by the Unemployment Insurance Task Forcer. The legislation would phase in the scheduled UI employer tax increases over the next three years. Specifically, the bill would shift the employer tax column from “C” to “D” in FY 2012, from “D” to “E” in FY 2013, and from “E” to “E+10 percent” in FY 2014. Column “A” contains the lowest tax rates, while column E+10 contains the highest. If the Legislature fails to act, current law would shift the UI employer tax rates from column “C” to “E+10 percent” on July 1, 2011 because the UI Trust Fund is carrying a negative balance.