The bill was released by the Senate Labor Committee on Thursday by a 5-0 margin. And its sponsor, committee Chair Fred Madden, D-4, said his first call was going to be to Senate President Steve Sweeney “to get this moving as fast as we can.”
At stake for New Jersey businesses is a looming $1 billion increase in unemployment payroll taxes in July 2021, due to the large, and continuing, draw made on the state’s Unemployment Insurance Trust Fund.
This week, the New Jersey Department of Labor and Workforce Development said it has dispensed $16.2 billion in unemployment benefits to jobless workers since the pandemic idled a significant portion of the state’s workforce nearly seven months ago.
NJBIA Vice President of Government Affairs Christopher Emigholz testified in support of the legislation, saying it would help businesses in two ways.
One, it would reduce the tax rate that usually applies when the UI Trust Fund is running at a deficit. And, two, employers would not be obligated to pay extra into the UI fund because they laid off workers during the pandemic.
“We hope that by spreading out the impact of this looming payroll tax increase, it makes it easier,” Emigholz said. “Maybe it spreads it out to the point where businesses are in a better place and we’ve recovered and we’ve restored operations. And maybe they’ll be able to afford to pay this.”
Individual companies pay different UI rates, set in a series of tiers and columns, based on their layoff experience and the financial health of the UI trust fund. New Jersey is currently in column B, which represents the second lowest UI tax rate available. If nothing is done, that rate will go right to the maximum, column E+10%.
“Slowing down the increase in the columns that determine payroll tax rates for all employers will help them avoid an enormous tax increase while the economy is still anticipated to be struggling next year,” Emigholz said.
Toward the end of his testimony, Emigholz also recommended a compelling consideration that any future, federal stimulus money be applied to federal loans that were taken out for the UI Fund.
“We hope that’s something that could be looked at – to further pay down the debt in UI, so we can further avoid these taxes,” he said. “I think that would help with this legislation – if we don’t have to go (column) B or CC or D or E. If the fund is in a better position naturally, or because there has been some relief, then we don’t have to trigger that automatic increase.”
To see, Emigholz’s full written testimony, click here.