TRENTON, NJ – Just when you thought things couldn’t get any worse for New Jersey businesses that lost nearly a year of income due to Governor Phil Murphy’s COVID-19 shutdown, they are.
Now, as businesses compete head to head in a wage battle between themselves and the state’s extended unemployment program which doesn’t incentivize New Jerseyans from getting a job, those businesses have been told by the Governor that they are the ones are now going to pay for everyone else to sit home and collect unemployment checks.
On Aug. 13, the state’s Department of Labor and Workforce Development posted a notice online that employers will have to begin paying a higher payroll tax rate to fund the depleted unemployment insurance program. According to the New Jersey Business & Industry Association, that tax hike kicks in on Oct. 1.
Governor Phil Murphy has announced a substantial increase to business payroll taxes in order to replenish the state’s unemployment fund which was decimated by the governor’s own policies.
Instead Republicans want Murphy to tap into the billions of dollars in federal recovery funds he is sitting on, instead of pushing that burden to the state’s struggling business owners.
As early as April of this year, Senator Declan O’Scanlon and Republican members of the Senate Budget & Appropriations Committee proposed using federal American Rescue Plan Act money to stabilize the Unemployment Insurance Fund and avoid massive tax increases on employers in the state.
The fund had been drained by a record number of benefit claims during the pandemic and lockdowns mandated by the Governor as more than 2 million residents received benefits.
On Friday, the Murphy Administration’s insistence to fill the void through higher taxes became official.
“From the comfort of his multi-million-dollar Italian villa, Governor Murphy signed off on an avoidable and enormous increase that will be unsustainable for many employers who barely survived Murphy’s forced closings and lockdowns,” said O’Scanlon (R-13). “I have to assume the Governor himself knew there was no way to defend this job-killing tax when federal funds could have avoided it, and that’s why he waited until he was on the other side of the globe to leak this out in a late Friday news dump.
“We are in this mess because of the Governor’s executive orders which delayed the reopening of many businesses and forced hundreds of thousands of pandemic unemployment claims to be filed,” State Senator Holzapfel stated. “Our caucus urged Governor Murphy to divert $6.2 billion in federal American Rescue Plan aid to offset the unemployment payouts, however, our requests were ignored and now our business owners are stuck with the bill.”
“Even the way this disastrous scheme was rolled out was cowardly – a cryptic edit on the Department of Labor and Workforce Development website announcing new employer rates. Gutless.”
The increase for employers and some nonprofits and local governmental bodies will be close to 20 percent, and it is scheduled to go into effect on October 1.
“What really pisses me off is this was completely avoidable. The state is sitting on a huge pile of federal money and Murphy should use that to bolster the U.I. Fund, just as the Senate Republicans have been saying since the moment federal funds became available,” O’Scanlon said.
“Finally, we are seeing some Democrat legislators warming up to the idea and supporting the use of federal money to save jobs. Murphy’s increase won’t hit until October, so he still has time to spare employers the unnecessary burden of a $252 million tax hit. He should think about that while he’s chilling in Europe.”
The tax increase comes at a time when the State unemployment rate is 7.3 percent. Only five states have a higher percentage of residents out of work.
“We know Goldman Sachs people are always trying to be the biggest, but bigger is not better when it comes to unemployment,” O’Scanlon said. “Jacking up employer taxes will only add to our number of out-of-work residents.
“We’re in this spot because the Governor ignored Republicans as he has since Day One. Maybe now that there is bipartisan support he will listen,” O’Scanlon said. “Murphy’s COVID mandates put thousands of small employers and mom-and-pop stores out of business, with some sectors losing close to 40 percent. If Murphy’s intent was to kill off even more job-creators, this is the way to do it.
“My colleagues and I are ready to come to Trenton and pass legislation to force the Governor to do the right thing and stop this tax from going into effect. Unless Democrats are just blowing smoke, they will do exactly that,” O’Scanlon noted.