| Last week, I talked about Chris Christie and the unemployment tax rate hike that he is saddling all NJ employers with by making ridiculous promises during the campaign and pointing fingers now that he already can't deliver. And being that employment taxes are the area where I specialize in professionally, it was something that I knew about and followed throughout the campaign.
What I found humorous about his already broken promise is how he blamed the Federal Government for this tax hike if loans to NJ were not forgiven. Now, this is not isolated to NJ, as 40 states' unemployment reserve funds are either in or approaching bankruptcy. But the irony here is that Christie was very outspoken about not having the Federal Government interfere when it was convenient to do so during the campaign, and now he wants the Federal Government to bail him out of his broken promises.
The reality is that, immature holding of his breath and irresponsible finger pointing aside, there are things that other states are doing, which NJ can also do, that would be constructive and productive - that is if Christie is interested in doing things other than pass blame and throw up his hands.
For example, take the statement of Senate Majority Leader Buono, who called for a series of specific steps to help NJ employers: --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.
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--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.
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--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.
Here is some context: Michigan (for the 2nd time since the early 90s) failed to repay the federal government for its loan for the UI fund, and all MI employers have to pay an additional $21 per employee in Federal Unemployment Tax as a result (I talked about how Christie's lack of understanding of the way unemployment taxes impact businesses would cost NJ employers the same $21 per employee, although at the time, I used $42 per employee, which was applicable to the most recent state to default on its' federal loan - New York a few years ago). A number of states have increased rates, wage limits that the unemployment tax is paid on or issued surcharges to replenish their funds. Florida employers are asking the legislature to reduce the increased assessment and I have other clients that are trying to do similar legislative routes in other states.
And here is where I agree and disagree with Buono:
Continuing to fully fund UI benefits is one approach I agree with, as well as waiver of interest and penalties - although I would caveat that to a degree. But in order to really help NJ employers, I would go a step further and have the state not "charge" employers with the unemployment benefits paid out to claimants if those benefits are funded by the federal government. This last matter is a NJ matter that will directly help NJ employers without making what I think is an unrealistic plea (or in Christie's case, demand) for a loan forgiveness when almost every other state is in the same boat.
The unemployment tax rates are impacted by 2 things within the employer's control and one that isn't: benefits paid out and taxes paid in are pretty much within the employer's control (to a degree). The amount of benefits paid out statewide and the level of the state fund is not. Right now, I think employers are charged for additional weeks of benefits as directed by the federal government, and possibly also by the additional eligible claimants from the stimulus bill. Removing those from the "employer calculation" would help individual employers as well - especially since the state isn't paying for such benefits.
Desperate times call for creative solutions, and Buono's proposal gets most of the way there. On the other hand, finger pointing, hypocrisy and a lack of leadership is precisely what is not needed.
Looks like it is going to be a long four years.... |
