The Senate on June 9 gave final approval to legislation that would prevent employers from getting hit with a $750 million increase in Unemployment Insurance (UI) payroll taxes on July 1. Lawmakers sent A-3819 to Governor Chris Christie in an effort to avoid this huge tax increase, which would have averaged $300 per employee.
Under state law, if the UI fund does not have enough money to pay benefits, payroll taxes on employers increase automatically. The fund has been broke since last March, forcing it to borrow over $1 billion from the federal government.
The bill also would raise the UI fund reserve ratios to build up a larger fund balance as a cushion against future recessions. The bill sets the reserve-ratio triggers at FY 2003 levels. This would permit UI taxes to be reduced as reserves accumulate, and those reserves would be subject to less fluctuation during economic downturns.