From the Philly Inquirer:
A tax increase that could cost employers $1 billion is needed to replenish New Jersey’s depleted unemployment-insurance fund, according to Gov. Corzine’s labor commissioner.
With large shortfalls in the fund expected for several years, David Socolow said, the state needs to let an automatic tax increase take effect July 1 to rebuild reserves. Once the fund recovers, a process likely to take several years, taxes would begin to fall to previous levels.
“The time has come to let the trust fund replenish automatically and get that over with, so that it can be restored to full solvency and employers can then return to lower tax rates,” Socolow said this week.
He has publicly warned of a tax increase since at least April, but some Republicans say the state cannot afford another.
The fund, which temporarily aids workers who lose their jobs, is expected to have a $1.2 billion deficit on March 31. That would move the tax rate on employers, beginning in July, to the highest level allowed.
The increase would add about $1 billion to the current $1.7 billion levy on businesses, according to the Department of Labor and Workforce Development.
With the impact of the recession still being felt in the labor market, the projected March 31 shortfall is so large that the tax rate is set to slide from its second-lowest level – Column B of the tax chart – to the highest, Column E plus 10 percent.
For the hardest-hit employers, that could mean a tax increase of nearly $700 per employee. At the lowest end of the scale, the increase would be closer to $270 per worker. A business’ rate varies according to its history of firing or laying off workers. Workers also pay into the program, but their rates are not set to change.