Buono Seeks Swift, Bipartisan Action From Congress To Rescue State’s Unemployment Fund From Insolvency

TRENTON – Senate Majority Leader Barbara Buono today called upon New Jersey’s entire Congressional delegation to help spearhead swift, bipartisan action at the federal level to rescue the state’s Unemployment Insurance Compensation Fund from insolvency and avoid a potentially crippling tax hike on employers.

“This is not a doomsday scenario prophecy, this is a stark reality,” said Sen. Buono. “Without federal assistance, New Jersey businesses will face a triggered tax hike come July that could likely send our economy into an entirely new tailspin. Our efforts to pump hundreds of millions of dollars into this fund over the last two years have done little to dampen the blow when faced with such massive levels of unemployment.”

In a letter to all 15 members of New Jersey’s congressional delegation, the Senate’s ranking female member underscored the tenuous circumstances that have led to record unemployment rates in New Jersey, and throughout the country, prompting near-unprecedented levels of unemployment benefit claims.

A full copy of Senator Buono’s letter is included below:

February 1, 2010

Senator Robert Menendez

One Gateway Center, Suite 1100

Newark, New Jersey 07102

Dear Senator Menendez:

I write to urge you to take swift bi-partisan action to assist New Jersey’s businesses and workers.

Due to deteriorating economic conditions throughout the nation and our State, the State’s unemployment rate went from 4.6% to 10.1% in just two years. This is the highest rate in thirty years. As a result, there have been greater than usual demands on our Unemployment Insurance Compensation Fund (“UI Fund”). The UI Fund is depleted. We face this painful reality, despite the State having contributed $ 410 million to the UI Fund in the last two budgets, when I chaired the Senate Budget Committee.

The State has already borrowed approximately $1.2 billion from the federal government to pay unemployment insurance benefits. Unfortunately, with unemployment expected to stay at record levels throughout 2010, we will need to continue to borrow. Based on existing federal and State law, unless certain steps are taken, the unemployment tax on New Jersey employers will almost double in July to an average of approximately $1188 per employee – an average increase of $416 per employee.

You must act on behalf of the State. At the same time that Congress is trying to preserve and create jobs, unless Congress acts, New Jersey employers will face a disincentive to hire and keep employees. Thus, I ask you to work with your Congressional colleagues to take the following actions:

– Continue fully funding the Extended Unemployment Insurance Benefits. This program provides an additional 20 weeks of benefits to the existing 26 weeks of benefits that workers who lost their jobs already receive. Pursuant to provisions included in the American Recovery and Reinvestment Act of 2009, the extended benefits are funded completely by the federal government until December 31, 2010. These payments are the life-line that keeps food on families’ tables and mortgage payments current. Without this program, our national economy is likely to take another turn for the worse.

– Extend the federal waiver of interest payments and interest accrual on loans received by state unemployment trust funds through the end of 2012. Currently, the waiver expires at the end of 2010. We are beginning to consider options for the next fiscal year budgets now and need to know our expected costs. Extending the waiver would be a strong job development initiative because it would save employers from such a large per employee tax increase.

– Forgive the $1.2 billion loan to New Jersey’s UI Fund, especially given that New Jersey employees, who are hurting, contribute to the UI Fund and the State contributed significant funds over the past two years.

Thank you for your efforts on behalf of New Jersey. I look forward to working with you and assisting New Jersey businesses and families on these vital issues.

Sincerely yours,

Barbara Buono

Senator 18th District