Dems call for compromise on NJ unemployment fund

The Democrats who lead the Senate and Assembly labor committees said today they want a compromise with Gov. Christie on a plan to fix to the state's unemployment fund: namely, lessening the tax increase on businesses without cutting any benefits for workers who lose their jobs.

Sen. Fred Madden (D., Gloucester) and Assemblyman Joseph Egan (D., Middlesex) said in a news release they are drafting a bill to limit the tax hike facing businesses July 1, keeping it to the same level Christie has proposed. That would mean a $300 million tax increase on businesses instead of the $1 billion hike set by current law. But unlike Christie's plan, the Democrats would not reduce any benefits.

Christie had called, among other steps, for reducing the maximum unemployment check to $550 a week, from $600. But if that cut was allowed, people on unemployment would also lose $25 per week that comes from federal funds, according to a note from the non-partisan Office of Legislative Services, Madden and Egan said. And while Christie's plan would impact only people who lose their jobs after the changes were approved, Madden and Egan said the $25 cut would impact everyone who receives unemployment benefits.

"Right now, the unemployed and their families need every penny to keep their heads above water. This makes it even more important for us to work with the administration to strike an agreement that properly balances the needs of the unemployed and the business community," Madden said in the release.

The Democrats' plan may be more politically palatable, but it also has risks. If benefits stay at the current level and tax increases are limited, the fund could struggle to keep up with demand, potentially forcing the state to go farther in debt to pay for promised benefits. Even under Christie's plan, with a combination of a tax increase and benefit cuts, it would take years for the unemployment fund to return to the black. 

Businesses' unemployment tax rates are set by law based on the amount of money in the unemployment fund; after years of raids and the recession's soaring job losses, the fund is scheduled to move to the highest tax rate allowed. That would mean employers would pay an extra $1 billion, or $400 more per employee, on average, in the next fiscal year. Christie's plan would limit the tax hike to $300 million, or $130 more per employee.

Madden and Egan backed that smaller increase.

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