TRENTON – In an effort to reduce an impending automatic tax hike for New Jersey employers, Gov. Chris Christie proposed cutting the maximum weekly unemployment benefit payment by $50 and imposing a one-week waiting period before applicants could collect benefits.
Democrats and labor leaders blasted the plan.
“At a time when half a million people in New Jersey are unemployed, through no fault of their own, they look to unemployment benefits as a lifeline,” said Senate Majority Leader Barbara Buono (D-Middlesex). “These benefits help keep people in their homes, put food on the table and pump money into the economy. As one of the few states where employees contribute toward the unemployment fund, we should not be considering proposals that would further erode this lifeline.”
New Jersey State AFL-CIO President Charles Wowkanech said that corporations benefited from four unemployment tax rate cuts since 1998 and argued that it was unfair to place more financial hardship on already-struggling workers. “We live in a state with a high cost of living, and the elimination of $50 per week for future unemployed workers, as well as imposing a one week waiting period for benefits, would be a significant financial hardship on workers that are already struggling to make ends meet.”
Senate Republican Leader Tom Kean (R-Union) defended the governor’s plan.
“Governor Christie is taking the necessary actions today, to ensure that the unemployment insurance fund regains solvency more quickly,” Kean stated. “During this recession the state has borrowed more than $1.6 billion from the federal government to maintain benefits for New Jerseyans looking for work. The governor’s reasonable modifications in benefits will limit job-killing tax increases on employers. Additionally, New Jersey will still provide the third highest maximum weekly benefit in the nation.”
New Jersey’s unemployment rate is currently at 10.1 percent, and many fear the automatic tax hike to replenish the state’s unemployment insurance fund could cause more job losses.
On July 1, the unemployment tax paid by employers will increase to the highest rate under the law, forcing small business owners to pay on average an increase of 52 percent or $400 per employee, according tot he governor’s office. The governor’s plan promises to reduce the take hike to 17 percent, an increase of $130 per employee.
Christie would reduce the weekly unemployment benefit maximum to $550, down from the current $600. The governor’s office noted that New Jersey is currently the state with the second highest benefits level in the country and one of six that offer weekly payouts in excess of $500. This change would save an estimated $295 million per year, according to the governor.
Christie would also implement a one-week waiting period before unemployed workers could begin claiming benefits. By keeping workers from collecting benefits during short term layoffs, the governor expects to save $67 million per year. Most other states, including New York and Pennsylvannia, have “wait periods.”
The governor also wants to implement tougher eligibility standards in cases where workers were dismissed as a result of misconduct, saving an anticipated $189 million per year. Christie also proposed making extended unemployment benefits contingent on receiving full federal funding of benefit costs, yielding an expected savings of $1.6 billion over the next two years.
The governor’s plan calls for changing the tax law to keep the employer tax from jumping more than one rate per year. Under the current law, employers are now paying the second lowest rate, but will see a jump to the highest rate on July 1.
Christie also supports a constitutional amendment proposal that would prevent the government from using unemployment insurance funds for other purposes. He also plans to appeal to the federal government for additional help.
Unlike many of the governor’s recent budget-balancing moves, Christie will need cooperation from state legislators to implement his changes to the unemployment system.