TRENTON – New Jersey businesses are facing a significant tax hike this summer if the federal government doesn’t help replenish the state’s unemployment fund, Gov. Chris Christie warned this week.
New Jersey’s Unemployment Insurance Fund will be $1.6 billion in debt by March, according to Christie. Business taxes are automatically increased by law when the fund’s balance goes below a certain level as measured every March.
The new Republican governor plans to ask the federal government to forgive loans that are keeping the fund solvent, but warned that there was no money in the state budget to stop the tax increase.
“I don’t have any choice but to allow [the tax] to kick in,” Christie said. “It’s a statutory requirement. If we get assistance, there still will be some measure of tax increase. The question is how much of a tax increase it will be on the businesses of New Jersey.”
In a worst-case scenario, employers could see an increase of up to $1,000 per employee in their unemployment tax starting July 1. Employees also pay into the unemployment fund, but are not facing a tax increase.
New Jersey has an estimated $1.3 billion deficit in the current fiscal year’s budget deficit and is an estimated $8.9 billion in the red for next year’s budget, which goes into effect in July.
According to figures released last week, New Jersey’s unemployment rate reached 10.1 percent in December, higher than the national average of 10 percent.
The fund is in such a precarious position because approximately $4.8 billion has been diverted for other purposes since 1992. Voters will have the ability to stop future raids through an amendment to the state’s constitution on November’s general election ballot.
Connect with NJTODAY.NET
Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address!