The $1.7 billion question: Lots of talk (but no answers) about replenishing the unemployment insurance fund

State Sen. Vin Gopal has said he won’t give up the fight when it comes to getting relief — any relief — for the business community, which has been stuck with a $100 bill. $1.7 billion to replenish the unemployment insurance fund.

It’s going to be an uphill battle.

While most other states have already used federal money to help replenish that fund, a Gopal co-sponsored bill — one that had bipartisan support, one that would have brought some relief to the business community — was withdrawn in the final moments of budget negotiations last week.

That’s why the business community was hit with a $296 million tax hike last Friday (the start of the fiscal year). The tax increase, which takes the form of higher unemployment insurance payments, is payable over the next year – when it is replaced by an even bigger tax on the following July 1, unless something happens. nothing is done.

Wine Gopal. (File photos)

(Put simply, the state depleted its unemployment insurance fund during the pandemic and now needs to rebuild it. See the explanation at the bottom of the story on how this will return to business.)

Despite failing to do anything during the budget process, Gopal (D-Ocean Twp.) said he was confident another bill, another fiscal measure, another revenue stream would become available. this autumn.

“We’re going to try to put together a bill in September, which the governor’s office said they would be willing to work on,” he said. “There’s still a lot of money (available) — and there’s no need to go through the budget process.

“I have a feeling there’s going to be a lot of financial play in September, October, November, December on a variety of things, like we’ve been doing for the past few years.”

Most business people think this is just wishful thinking.

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Governor Phil Murphy has had many opportunities to act on the unemployment insurance issue. And while there are always questions, the biggest response was just a shift in his stated line on using federal funds to replenish the unemployment insurance fund — which more than three dozens of states have done so in one way or another.

Instead of ‘all options are on the table’, it’s now about getting the ‘biggest value for money’.

Murphy on Tuesday highlighted all of the programs the state has put in place to help small businesses since the pandemic began.

To be fair, he said New Jersey had the third-highest amount of small business grants (behind only California and New York). By size, this means the state has the highest per capita spending. But, to be fair, many believe the UI tax hike does more than eliminate them.

Murphy, when asked directly, chose not to answer the UI restocking question with details.

“I want to make sure that as we continue to push resources to small businesses, we get the best bang for our buck,” he said.

“I continue to be open-minded on the UI angle, but I want to make sure the money we put on the street has the greatest return and value for money.”

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Chris Emigholz, the highly regarded vice president of government affairs at the New Jersey Business & Industry Association — the organization’s go-to person when it comes to the state budget — doesn’t understand why this is even a ‘a debate.

Chris Emigholz.

Increasing unemployment insurance funding is a tax on the business community when there is money available to help, he said. The state – after accumulating record revenues – has a relief fund of more than $5 billion.

“It’s almost like punishing the business world just because you can,” Emigholz said. “In a way, this tax increase is akin to a taxation of the shutdown, because the unemployment insurance fund would not have been depleted to the extent that it was if we hadn’t hadn’t had one of the toughest shutdowns in the country.”

Emigholz is clear: he is not against the shutdown or any of the measures taken by the state.

“I’m not here to debate whether that was the right thing or the wrong thing, from a public health perspective,” he said. “Public health, as the governor rightly said, is economic health. If something was necessary for public health, then do it. But anything done for public health had economic ramifications for health. And so, in essence, you’re choosing to tax your closure if you don’t do anything about it.

“(The governor) had businesses shut down, had people laid off. Then choosing not to compensate companies that are now paying more taxes because you caused the layoff in the first place is hard to swallow. And I think that’s a point that gets lost here.

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While Emigholz believes that replenishing the unemployment insurance fund is a matter of fairness for the business community, Gopal believes it is a matter of survival. He sees the impact every day on small businesses in his district, which includes Asbury Park, Red Bank and Long Branch, among others.

“I have more Main Street businesses in my legislative district than I think anywhere in the state,” he said. “A lot of moms and dads – people who have been hit hard during the pandemic. It’s a way to support them. »

Gopal was proud that so many groups got something in the budget, offering aid that went to property tax relief, schools (K-12 and higher education), people seniors, veterans and others.

“The one area that’s glaring is small business,” he said. “This budget didn’t do enough for small businesses, and that’s what we need to fix.

At least Gopal said something needs to be done for smaller businesses, those with 25 or fewer employees.

“Let’s tighten the language,” he said.

Gopal is confident that State Senate Speaker Nick Scutari (D-Clark) and Assembly Speaker Craig Coughlin (D-Woodbridge) support the unemployment insurance issue. And he added that the governor’s chief of staff, George Helmy, had also been receptive.

“(Helmy) said he’s committed to working with me when we get back in September to see what we can do for small businesses,” Gopal said.

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Where does he go from here?

The administration, when asked specifically if it was looking to help fill the unemployment insurance gap, released a lengthy statement in which it was proud of its efforts to help the business community — not to mention the unemployment insurance fund.

“We are incredibly proud to have worked with our legislative partners throughout the pandemic to prioritize small business recovery, including injecting nearly $800 million into small business relief programs,” says the press release. “The focus on our economic growth and the revitalization of our main streets continues with historic investments in this budget.

“This budget invests millions more in our Black and Latino Seed Fund, invests millions to support our makers, invests over $50 million in the Main Street Recovery Program and includes additional funding for the Preservation Program neighborhoods and the neighborhood revitalization tax credit program.

“Governor. Murphy looks forward to working with the Legislative Assembly in the months ahead to further support our business community.

Whether that includes replenishing the unemployment insurance fund remains to be seen.

Emigholz believes the impact of doing nothing on the unemployment insurance fund could be felt for years — and used against the state by other states in the never-ending battle for business.

What more could you ask for for your money? He asked.

“It’s a matter of competitiveness, because the majority of states across the country have said, ‘We don’t want corporations paying more taxes because of a pandemic; it was not their fault,” he said. “If you’re one of those states that doesn’t choose to do that, what do you say to businesses?”

The situation of the Unemployment Insurance Fund

There are a number of estimates of how much additional tax will be needed to replenish the unemployment insurance fund — and roughly how much will be raised from the three-year cycle in which New Jersey businesses use different columns to calculate their tax.

From the Office of Legislative Services, using guidance from the Department of Labor and Workforce Development, here’s what the state expects to gain from this move.

FISCAL YEAR 2022

Move from column B to column C:

Increase of $252 million

FISCAL YEAR 2023

Move from column C to column D:

Increase of $548.6 million
Increase of $296.6 million, in addition to the increase of $252 million for moving from column B to column C

FISCAL YEAR 2024

Move from column D to column E:

Increase of $885 million
Increase of $336.4 million in addition to the increase of $548.6 million for moving from column B to column D

Total over three years

$252 million + $548.6 million + $885 million = $1.686 billion

Note: Companies calculate their UI premiums based on which column the state is in – the column is based on the health of the fund, with A being best, E+10% being worst. Before the pandemic, New Jersey was in Column B.

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