The state Legislature approved a bill backed by the Senate president that would allow state and local governments to partially furlough a combined 100,000 workers – an alternative to potential mass layoffs as the COVID-19 recession pummels tax revenue.
Both the Assembly and Senate approved the measure, known as the “Employee Job-Sharing Protection Act,” sending it to Gov. Phil Murphy’s desk, where the bill faces an uncertain future.
It would allow public and private employers to cut workers’ hours and pay while still keeping any retirement and health benefits in place.
The state’s unemployment system would make up for the lost income under the bill, which Senate President Stephen Sweeney, D-3rd District, said is made possible because of the $600 in added weekly benefits through the end of July, spelled out under the federal Coronavirus Aid, Relief and Economic Security Act.
Sweeney, the bill’s main sponsor, said the plan could save state and local governments upward of $750 million in the near future.
“We’re talking about local governments that can spare or furlough workers and still get a benefit from the worker being furloughed by working part-time and the federal government picking up the tab for us,” Sweeney said in a May 12 editorial interview with NJBIZ.
A worker making $30,000 a year would bring in an extra $5,100 over their three-month furlough period, according to the proposal.
Someone making $50,000 a year would get an extra $3,300 during that window, while someone earning $70,000 would make an extra $1,008 and someone earning $76,500 would break even.
“The federal government included this special furlough program in the CARES Act because it was better to keep people working part-time with full health benefits during the crisis than laying them off without health insurance and overburdening the unemployment system,” Sen. Steven Oroho, R-24th District, said in a Thursday statement.
Murphy has been largely cool about the proposal, arguing that any kind of furlough or cut in hours would be ill-advised.
“I think we’ve got to be very careful,” Murphy said on May 5. “We need government, in many cases, more than we’ve ever needed it before.”
Data released Wednesday from the state Treasury shows New Jersey with a budget shortfall of at least $10 billion through the end of June 2021. That includes a $2.8 billion shortfall through the end of the current fiscal year, which ends on on Sept. 30, and a $7.3 billion shortfall between then and June 30, 2021, the end of the next fiscal year.
All of this, Murphy cautioned on May 14, could mean “enormous cutting of services and headcount from the very people we need at the point of attack right now in the biggest health care crisis in the history of our state and county.”
He’s spent several weeks lobbying for large-scale federal aid, and pushed borrowing up to $5 billion to cover state finances.
But Sweeney reiterated on May 12 that “by doing furloughs, it’s better than layoffs.”
To contain and blunt the impact of the COVID-19 outbreak, Murphy and governors across the country have placed their states in near-total lockdown. The process has shown many signs of working; such as a slow and steady drop in new positive cases, hospitalizations and fatalities. But in the process, commerce in New Jersey has come to a screeching halt, and revenue from the state’s income, gas, corporate business, sales, lottery and gambling taxes have evaporated, as well as tolls and transit fares, has dried up.