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[vc_row][vc_column][vc_column_text]The state Legislature is making one final effort to use federal pandemic relief funds to refill the unemployment system and avoid tax increases on businesses.

Similar proposals gained traction over the summer, after the Department of Labor and Workforce Development revealed that New Jersey businesses would have to pay $252 million starting in October to replenish the state’s unemployment fund – the first of three such increases.

Time is short. The Legislature will meet this week and again next week ahead of Christmas, and for one week between the New Year’s holiday and the last voting day on Jan. 10.

An estimated $37 billion has been distributed to roughly 1.6 million New Jersey claimants, though only $9 billion has come from the state, according to the Assembly Democrats Office.

The state unemployment fund borrowed billions of dollars from the federal government to stay in the black – something 19 other states have done during the pandemic, according to a report from Stateline, an initiative of the Pew Charitable Trusts.

Under Assembly Bill 6227, the state would tap into its federal COVID-19 relief money — New Jersey received $6.2 billion under the American Rescue Plan — to repay the debt rather than impose tax increases on businesses.

Sixteen other states have tapped federal relief funds cover unemployment fund shortfalls, according to data compiled by the National Conference of State Legislatures. The Tax Foundation notes that the ARP sets aside $94.7 billion for that  purpose, and the nonprofit admonished states that have not taken that route.

Estimates from the Assembly Democrats Office, whose members are introducing the bill, suggest businesses will be hit by another $296.6 million of tax increases next year, and $336.4 million the year after.

“This legislation will do two things, the most important of which will be providing meaningful relief for employers by keeping tax rates manageable so that they can invest in their businesses, hire more staff, and pay wages and benefits,” Assembly Democratic Leader Lou Greenwald, D-6th District, said in a Dec. 10 statement. Greenwald is the primary sponsor of the measure.

“It will also promote fiscal responsibility by paying off our state’s debt so that we can begin to rebuild our UI fund and prepare for the future.”

Under the bill, the Labor Department would prepare a report for lawmakers each year that includes what the state still owes to the federal government, how much money must be put into the unemployment trust fund by March 31 each year to avoid a tax increase, different employer cost estimates based on higher and lower payroll tax rates, and how long it would take for the state to lower those rates.

Murphy approved a measure earlier this year to impose the tax increases over a three-year period. The governor and legislative leadership have not made clear whether they would sign on to such a proposal.

“It is a small saving grace that employers get to pay this added tax over three years, instead of paying all at once,” Bob Considine, a spokesperson for the New Jersey Business and Industry Association, said in an August email. “But at the end of the day, this is a large tax not on income, profits or assets, but on actual jobs as employers desperately look to recover employees.”

But outgoing Senate President Stephen Sweeney, D-3rd District suggested at an NJBIA event several weeks ago that there are not enough ARP funds to go around. “If we took every single dollar that we had to offset the unemployment, it wouldn’t have been enough,” Sweeney said during a Nov. 30 NJBIA event.

“Do you use the dollars to try to improve the economy? Do you use the dollars to fix things that are broken in the state of New Jersey?” Sweeney continued. “It’s a tough position at the end of the day because there’s not enough money.”

Editor’s note: A previous version of this story referenced a report from the Pew Research Center; that was incorrect, the report is from Stateline, an initiative of the Pew Charitable Trusts. It was updated at 10:53 a.m. EST on Dec. 15, 2021.

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