Christie blames past execs for $80M employers’ tax hike

TRENTON – Gov. Chris Christie said today that any criticism over a recent boost in unemployment insurance payments by local businesses should be directed to previous governors and not to him.

The state failed to repay a $1.7 billion federal loan for unemployment insurance and New Jersey employers are footing the $80 million bill.

Christie said today that he penned a handwritten letter to one business owner who inquired to the front office about the tax hike. The letter outlined a history of front office misspending that Christie said predated his tenure. “(T)here’s nothing I can do about this one,” he said at his press conference today.

The hike to employers’ federal unemployment tax amounts to an additional $21 per employee in 2011 and was triggered in 20 states carrying a loan balance for two consecutive years.

The state is, Christie said, “in the process of repaying that loan to the federal government.” The state Treasury Department recently told PolitickerNJ that the loan balance stood at $1.4 billion.

Previous coverage: State’s failure to repay unemployment loan means higher tax on employers

In the meantime, Christie said he was forced to increase employers’ state taxes to rebuild the Unemployment Trust Fund, which had been bled dry. It brings the total increase for state employers to $180 per employee.

Christie keyed in on what he said were three culpable former governors – Christie Whitman, Jim McGreevey, and Dick Codey – for “artificially” filling budget gaps with the $4.7 billion in unemployment funds. The misspending, Christie said, led to a dire shortfall in funding that necessitated the federal loan. The loan was taken in 2008 by Gov. Jon Corzine – who was spared criticism by Christie today – following the economic downturn and a funding shortfall that would have halted state unemployment payments.

“That just would have been unacceptable to me,” Christie said. “I have no qualms about having borrowed it.” That said, the chief executive was not happy about the hike to employers. “There’s a lot of crap I’ve inherited and that’s just one of them.”

Treasury spokesman Andy Pratt told PolitickerNJ that the loan is unlikely to be paid back before late 2013, which could effectively double the tax hit in 2012 and triple it in 2013.

Christie said he and state Sen. President Steve Sweeney, (D-3), West Deptford, teamed up to pass a bill last year preventing this from happening in the future.

The original bill, S1813, sponsored by state Sen. Fed Madden, (D-4), Washington Township, and Sweeney did not actually address the long-term cause of the shortfall, but Christie conditionally vetoed the measure and the Legislature approved his override.

“(T)he scheduled payroll tax increase on employers would do enormous harm to an economy already staggering from the recession,” Christie wrote. “However, this bill simply does not go far enough to solve the fundamental problems with (unemployment insurance, or UI) that will persist without bold reform. As you know, from 1992 to 2006, approximately $4.6 billion was diverted from the UI fund. In addition, since March 2009, the State has borrowed over $1.75 billion from the federal government. I am advised that if no immediate action is taken, the debt owed to the federal government will increase dramatically. This is simply unacceptable, and will prove catastrophic for the employer community, the labor community, and the overall economy. The State can no longer pursue the status quo, but must take immediate action.”

“It is time for the State to achieve comprehensive reform in the State’s unemployment compensation system in order to bring the fund back to solvency in a fair and balanced way,” Christie wrote. Among the measures was a redefining of “misconduct”; the addition of a “severe misconduct” tier; Department of Labor & Workforce Development regulatory compliance; and the creation of the Unemployment Insurance Fund Task Force.

The task force, approved by law, will be conducting a “comprehensive review and assessment of the State’s unemployment compensation system that would include an evaluation of: eligibility standards; benefit levels; certain definitions in the unemployment compensation law; the statutory matrix for the payroll tax triggers; contributions to the unemployment insurance fund and the experience rating table; and other areas relevant to the short-term and long-term solvency of the unemployment insurance fund.”

Christie also asked for a moratorium on benefit increases while the task force is in place.

Christie blames past execs for $80M employers’ tax hike