TRENTON – Not only will New Jersey employers pay higher unemployment taxes starting next month, but now the state is paying interest to the federal government on the loan it takes to pay unemployment benefits.
The US Department of Labor’s advance had been moot since March 2020, but that grace period ended on Monday. The loan amount can vary daily as it functions as a line of credit, based on the state’s unemployment fund balance, but exceeded $ 217 million and increased on Tuesday.
In total, 10 states and the Virgin Islands owe $ 44.7 billion. Nevada and Ohio paid off their balances last week to avoid paying the new applicable interest rate of nearly 2.3%.
The state has more than $ 2 billion in a new debt avoidance fund, as well as more than $ 4 billion in federal coronavirus funding, but Gov. Phil Murphy has said he doesn’t had not yet been decided how this funding would be used.
“The only thing we want to do is make sure we have the highest rate of return on anything, wherever we deploy our money,” Murphy said. “So I guess we’re looking at the interest versus the return we might get by deploying that money elsewhere.”
Senator Declan O’Scanlon, R-Monmouth, said Republican lawmakers had been pushing since the spring for the state to replenish the unemployment fund to avoid a tax hike of around $ 250 million on workers. employers – which was already a compromise enacted in law that avoided a more than $ 900 million increase.
“So now on this, in addition to the natural growth that is going to occur due to the state of our economy, it will increase with interest now.” And that’s a problem and again should have been avoided completely, ”O’Scanlon said.
O’Scanlon said employers “should be hit” by a 20% payroll tax hike that will rise again in 2022 and 2023 unless the state steps in. The total increase in businesses over these three years combined is expected to total $ 1.5 billion.
“It’s a horrible punch in the stomachs of these employers who are already in trouble. We need them to create these jobs. We need people to get back to work. We need the New Jersey economy to buzz, ”he said. “To impose a tax on them like this now, when we have billions of federal dollars earmarked for relief exactly like this, is a fault on the part of Governor Murphy and our state government.”
O’Scanlon said the state could have used funding from the CARES Act, funding from the US bailout, money from the general state budget, money from the debt avoidance fund, or other creative ways to avoid rising corporate taxes.
“There were a dozen ways we could have handled this. And should have. And still should, ”O’Scanlon said.
All Republican lawmakers have signed a petition that would require a special session of the legislature to deal with payroll tax – but they represent less than 40% of the seats, a majority is needed, and no Democrats have signed.
“Democrats, for all their talk, none of them signed it, which is a clear indication that they really don’t care about New Jersey businesses and jobs and New Jersey’s economy as a whole,” he said. O’Scanlon said.
Michael Symons is the State House bureau chief for New Jersey 101.5. Contact him at [email protected].
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