Unemployment insurance fund solvency is good news for employers.
$200 Million Tax Cut Expected for New Jersey Businesses
Come
July, employers in New Jersey will see their unemployment insurance taxes
decrease, to the tune of roughly $48 per employee.
For
15 years prior to the Great Recession, state governors and legislators raided
nearly $5 billion from the unemployment trust fund. So when the recession hit
and unemployment surged, the fund was not in a position to pay out the huge
demand for unemployment benefits.
Workers
who have received a no-fault layoff are eligible for two-thirds of their
income, up to $657 per week, for six months, and unemployment spiked to nearly
10 percent in New Jersey in 2009 and 2010. Like many other states, New Jersey
was forced to borrow money from the federal government—roughly $2 billion—to
keep the fund afloat. At the same time, an increase in payroll taxes was
triggered, so business owners shouldered a big part of the burden as Gov.
Christie and legislators worked to get things back on track.
Thanks
to several important steps taken, the fund is back in the black and businesses
are seeing a reduction in their tax burden. For example, Gov. Christie’s
administration enacted anti-fraud initiatives, such as comparing new hire lists
to current unemployment lists and checking claims for filings by nonresidents.
In 2010, voters also overwhelmingly approved a ballot item amending the state
constitution to prohibit future raids on the fund.
Additionally,
New Jersey tax collections have increased overall, and the state unemployment
rate has declined significantly. With all of these factors, New Jersey was able
to pay back its debt to the federal government by May 2014, and the
unemployment trust fund is on track to reach a balance of $1 billion.
