Even if you don’t believe that, in the current economic climate, it is pretty standard (i.e. Keynesian) economics to do something like this.

Jobless benefits in a bind

Gov. Jon Corzine yesterday proposed an emergency $260 million infusion into the fund that bankrolls benefit checks for laid-off workers, as rising joblessness and years of state budget raids pushed the fund toward insolvency.

Corzine’s bailout, which must be approved by the Legislature, would benefit employers, who otherwise would face an automatic $350 million tax hike later this year to replenish the state’s Unemployment Insurance Trust Fund.

“We should avoid imposing a $350 million tax increase on employers during this national recession,” Corzine said in a statement announcing the bailout plan yesterday. “I am asking for the Legislature’s help to address this problem now to prevent this tax increase, so that businesses will have a stable and certain tax environment for economic growth in New Jersey.”

The crisis facing the trust fund is the latest dilemma to emerge as state officials confront the fallout from a slowing economy and years of state budgets that were balanced through borrowing or the diversion of billions of dollars in funds earmarked for retirement benefits, transportation or other long-term investments.

The unemployment fund had a balance of $3 billion less than five years ago, but its balance has dipped below $350 million, largely because lawmakers diverted billions of dollars from it to pay for the state’s Charity Care hospital subsidies.

The fund pays out about $2.1 billion a year in benefits to laid-off workers. That is about $100 million more than it takes in from a payroll tax paid by employers and workers. The funds on hand would cover about two months worth of benefits.

“Because of 14 years of diversions, this fund is running essentially on fumes,” said state Labor Commissioner David Socolow.

The state’s troubled economy also threatens to pinch the fund. Through February, the state lost 10,300 jobs this year, according to the state Labor Department. New Jersey’s unemployment rate is running at 4.8 percent.

Under state law, employers would face a higher payroll-tax rate July 1 if the value of the fund drops below 1.4 percent of the total payroll of the employees it covers. Socolow said the funds would miss that threshold by at least $25 million, if the calculations were made as scheduled effective March 31.

To head off the tax hike, Corzine proposed depositing $260 million into the fund and postponing for three months the date on which the calculations are made to determine whether a higher tax is needed to keep the fund solvent.