Not among the flurry of bills passed during the legislature’s last scheduled voting day before the summer recess was a measure that would have offset impending unemployment insurance tax increases, and the bill’s lack of movement left business leaders angry and a state senator pointing the finger at the governor.
The bill would have provided tax credits to some employers to offset what business owners say is a $300 million tax hike on Friday. The tax increase is intended to replenish the state’s unemployment fund, which was depleted after claims for unemployment benefits soared during the pandemic. But the measure was removed on Wednesday from the Senate agenda.
The measure led to strong criticism from business groups. Christina M. Renna, President & The CEO of the Southern New Jersey Chamber of Commerce said in a statement that the Senate’s omission will lead to “unfair tax increases on businesses that the state government had the power to stop but chose to turn a blind eye to.”
“The ongoing plight of small businesses, especially those that are women and minority-owned, remains very real. It is well known that the state is full of money due to federal recovery money,” Renna said.
The bill’s sponsor, Senator Fred Madden (D-Gloucester), said he received a call from George Helmy, Governor Phil Murphy’s chief of staff, during Wednesday’s voting session and agreed to withdraw the bill due to concerns from the government, which he said were not detailed in the call.
“I didn’t know there were real concerns until the 11th hour. I wish they had surfaced a little sooner,” Madden said. “It is what it is. I’ll deal with it.”
As unemployment tax rates automatically adjust based on the health of the unemployment insurance fund, tax rates increase as your balance decreases. Instead of hitting New Jersey businesses with nearly $1 billion in one-time tax hikes, Governor Phil Murphy last year signed a bill that would cut tax hikes by more than three years. The second of the two is scheduled to take effect on July 1.
At a Thursday press conference in which Murphy signed the state’s annual spending bill and other related measures, the governor deferred questions about the last-minute change in the bill’s trajectory to lawmakers in the upper house.
“I’ve always been open-minded, but I also want to make sure we get the most bang for our buck,” Murphy said. “Also, this is a question you should ask the Senate.”
Chris Emigholz, vice president of government affairs for the New Jersey Business and Industry Association, echoed Madden’s version of events.
“Our understanding is that the governor’s office asked the Senate not to post the bill. The Senate was planning, and then I heard the governor’s office exerted more pressure not to publish the bill,” he said. “I have no idea what that pressure is. I have no idea who’s asking who, but that’s what we’ve heard, that the governor’s office didn’t want this to come to their table.”
Optimism ahead
Despite the abrupt change of direction, Madden, who chairs the Senate labor committee, said he expects the Legislature to take up the issue when lawmakers return to Trenton in the fall (legislators may meet over the summer, but nothing is scheduled yet). . Read also : Al Davis, John Madden named Class 2022 inductees for the California Sports Hall of Fame.
“We are clearly in a position to be able to work together. That’s where the optimism is,” said Madden, who added that he had a “good conversation” with Helmy.
It is unclear what form any future relief might take. Business groups and some lawmakers have already urged the state to use federal funds to bolster the unemployment fund, though those calls have so far been muted.
New Jersey has about $1.3 billion in federal aid disbursed under the American Rescue Plan that it could allocate to that end, and it could use some of the nearly $3 billion in a fund meant to manage the state’s debt.
Both treaties would require a request from the Murphy administration and the approval of the Joint Committee on Budget Oversight and would likely be much more expensive than the Madden bill, which was supposed to offset tax revenues by less than $200 million.
Emigholz noted that other states used federal funds to offset unemployment tax increases. He warned that companies besieged by New Jersey’s high corporate, real estate and income tax rates might consider laying off workers or moving elsewhere.
The bill has critics among progressives, who say companies have received generous federal and state aid to help them through pandemic-related business closures. Any money spent to offset unemployment tax increases would be better spent helping people who have suffered the most during the pandemic, they say.
Assembly Speaker Craig Coughlin (D-Middlesex), whose house unanimously passed a version of the bill earlier this month, was optimistic about the chances of lawmakers reaching a deal in the future. MP Roy Freiman (D-Somerset) is the main sponsor of the project in the Assembly.
“We will continue to work with the Senate, as we do on all bills,” he said Wednesday. “Alderman Freiman’s bill was a good project, important in helping the 70% of small businesses that would benefit from it, and we look forward to working with them to see if we can get things done.”
Sophie Nieto-Muñoz contributed to this story.
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