New Jersey groups want Murphy to use federal dollars to offset $1 billion unemployment insurance tax hike

Governor Murphy signs small business relief legislation and holds a discussion on the Impact of COVID-19 on small businesses with Senate Majority Leader Loretta Weinberg, Assemblyman Gordon Johnson, Simply Vietnamese Owner K.T. Tran, and Ma Mi Eatery Owner Joseph Diovisalvo in Tenafly on Wednesday, July 21, 2021 (OIT/NJ Governor's Office).

(The Center Square) – Business groups and lawmakers are stepping up their push for New Jersey to use federal COVID-19 relief dollars to replenish its Unemployment Insurance (UI) Trust Fund.

New Jersey businesses could pay a roughly $885 million UI tax increase over three years, including a $252 million increase starting in October.

The New Jersey Business Coalition sent a letter to Gov. Phil Murphy asking him to use federal money – whether American Rescue Plan (ARP) or Coronavirus Aid, Relief and Economic Security (CARES) Act money – to eliminate the tax increase.

Using this money “can help businesses invest in their company and workforce with COVID safeguards, increase wages to respond to the hiring crisis, rehire after COVID layoffs, and recover revenue lost during the pandemic,” the coalition, a group of about 100 business, trade and nonprofit associations, wrote.

“Otherwise, employers will have to divert substantial resources to cover the approximately billion-dollar UI tax increase spread over three years despite the fact that the mass layoffs were not of their doing and only necessary due to the unprecedented pandemic and state-mandated COVID-19 restrictions on businesses,” they added.

Murphy previously signed a measure to assess the increase over three years. During a Monday news briefing, the governor was noncommittal on using federal funds to replenish the unemployment fund but indicated more action was in the works.

“I signed a law several months ago that would smooth this increase out,” Murphy said, according to a transcript. “Secondly, no state in America per capita has put more money into small businesses than New Jersey. We’re behind only California and New York, and they’re a lot bigger than we are.

“Thirdly, folks should expect we will be doing more,” the governor added. “Whether it’s specific or not to the unemployment insurance question, you should know that we are constantly thinking through how we can continue to plus up help and aid to small businesses, and we will do that.”

The push to use federal dollars aligns with requests lawmakers have made in recent weeks.

“It’s absolutely ludicrous that Governor Murphy might waste millions on unnecessary interest payments for UI Fund debt when we have billions in federal relief funds sitting in the bank that we could use to repay the debt in full before any interest is owed,” state Sen. Declan O’Scanlon, R-Monmouth, said in a statement this week.

“The governor has a short window of opportunity to work with the Legislature to allocate the necessary funds before interest accrues,” O’Scanlon, a member of the Senate Budget & Appropriations Committee, added. “It makes no sense for Governor Murphy to flush tens of millions of dollars down the toilet when we have the means to act responsibly.”

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