Senate bill to help (slightly) defuse $1.6 billion business unemployment insurance tax takes first step

Michael Egenton, longtime head of government relations for the New Jersey Chamber of Commerceoften finds a modest — and personal — way to put legislation into perspective.

That’s why when he talks about the bill that would save business owners more than $300 million of the more than $1.6 billion needed to replenish the ravaged unemployment insurance fund by the pandemic, it doesn’t address questions about $300 million or $400 million – and it doesn’t try to explain the difference between column D and column E on the form.

Egenton is about a random small business owner.

Michael Egenton. (File photo)

“Imagine if you were one of thousands of restaurants that have been crushed by the pandemic and dipped into your own pocket to pay for upgrades that would help you serve customers inside and out – even keeping some of your employees on the payroll,” he said. . “Can’t we help them?

It’s not a case of feel-good or corporate gifts, as some said during Monday’s hearing. This is for the state to use federal funding — funding provided specifically to help fight the economic disaster caused by the pandemic — to help replenish the unemployment insurance fund.

Egenton – and many others – hope Governor Phil Murphy will address the issue during his state budget speech on Tuesday afternoon. The one in which many spending programs will be offered.

The hope is that the replenishment of the unemployment insurance fund will be mentioned. No one is sure that will be the case.

The simple reason: it’s something that Murphy could have done a long time ago, if he had wanted to.

Chris Emigholz, Vice President of Government Affairs at New Jersey Business and Industry Associationsaid the concept has been the norm across the country for some time.

Emigholz said 20 states have done so using federal CARES Act money (fully or partially), and another 18 states have used federal American Rescue Plan Act funds for the same purpose.

Chris Emigholz. (File photo)

He explained it this way.

“Unemployment Insurance payroll taxes are not a tax on income or property or business profits or wealth – they are a tax on the mere existence of a job,” he said. . “At a time when we want jobs back, the state shouldn’t be concerned with making creating and maintaining jobs less affordable.

Here’s what New Jersey businesses are being asked to do to replenish the $1.6 billion unemployment insurance fund deficit. The increase occurs when the state moves the columns (from C to D to E) on the unemployment insurance fund form:

  • Financial year 2022: New Jersey businesses are currently paying $252 million more to the unemployment insurance fund than they paid before the pandemic;
  • FISCAL YEAR 2023: An additional $296.6 million will be added to this total, meaning New Jersey businesses will have to pay $548.6 million more than before the pandemic;
  • FISCAL YEAR 2024: An additional $336.4 would be added, meaning New Jersey businesses would be liable for $885 million more than they paid before the pandemic.

A Bill to Help (S733) is sponsored by the Sens State. Fred Madden (D-Turnersville) and Troy Singleton (D-Moorestown). The bill would not wipe out all costs (again, as some states have done). This would simply eliminate the final bump in Year 3, saving $336.4 million.

The bill also asks New Jersey to allocate funds to repay an advanced federal loan to ensure the state’s unemployment insurance fund remains solvent during the throes of the pandemic. The federal government waived interest on the loan for most of the pandemic, but recently started charging interest again.

“New Jersey is now paying millions of dollars in interest to the federal government, while we’re sitting on billions of dollars in bailout/recovery from the federal government,” Emigholz said. “It would be like putting money under your mattress instead of paying credit card bills to avoid unnecessary and expensive interest.”

The bill passed the Labor Committee on Monday morning. Emigholz and Egenton hope it can go further. A similar bill will likely soon make its way through the Assembly.

Emigholz said it was the right thing to do.

“Nearly $1 billion in new taxes is a difficult additional burden on employers as our economy tries to recover from the impact of COVID-19,” he said. “This tax increase was only necessary because businesses were forced to lay off due to closures and restrictions.”

Egenton said he was cautiously optimistic. He said he understands the situation — understands that everyone is reaching out, hoping to get some of the massive amount of federal funding. He hopes the business community is not forgotten.

“It’s the simple gesture that really resonates and means a lot,” he said.

It’s a way of saying to thousands of small business owners, “Thank you for doing all you can during the pandemic. »

Norman D. Briggs