Governor Jon Corzine on February 18 outlined a plan to close a $3.6 billion current year budget deficit and add money to the State Unemployment Insurance (UI) Fund to avoid a 25 percent payroll tax increase. Corzine proposed using a combination of spending cuts, existing surpluses and a tax amnesty program to help close the deficit before the end of the fiscal year on June 30.

No part of the budget has been hit harder than the UI fund. Rising unemployment has shrunk UI revenues while increasing unemployment benefit payouts. If the fund balance drops below a certain level by the end of March, it would trigger a 25 percent payroll tax on all employers. The federal economic stimulus bill, signed into law on February 17, allocates $214 million to replenish the fund. On Wednesday, Corzine urged adding another $270 million in State funds to avert a UI tax increase.

NJBIA has been working with the Governor and the Legislature to avoid a huge payroll tax increase, which in this economic environment would be devastating. Companies are already struggling to hold on to the jobs they have. To hit them with a tax increase tied directly to employment would exacerbate New Jersey’s employment problems.

To close the budget deficit, Corzine outlined another $470 million in spending reductions (in addition to the $800 million in cuts he proposed in January), including a mandatory two-day furlough for State employees, one day in May, the other in June. He also proposed using $500 million from the 2008 budget that had been targeted for debt reduction, another $200 million from the 2008 budget surplus and $450 million from the State’s rainy day fund. Corzine called for a tax amnesty program that he said would generate $100 million in revenue and for transferring balances from dedicated funds to close the remaining budget gap. For more information, contact Art Maurice.

Federal Economic Stimulus Bill Has Benefits for New Jersey Businesses

President Obama on February 17 signed legislation aimed at stimulating the nation's economy by increasing government spending and cutting taxes. For businesses, the American Recovery and Reinvestment Act of 2009 (H.R. 1):

• allows companies with up to $15 million in gross receipts to deduct their net operating losses in 2008 from profits going back five years (2003-2007);

• extends 50 percent bonus depreciation and enhanced expensing through 2010 in order to spur investment and sales of capital equipment;

• delays until 2012 the withholding of 3 percent from payments by the federal, state and local governments for goods and services; and

• allows taxpayers to defer income from certain discharges of indebtedness in 2009 and 2010 until the year 2014 and allows for a five-year pay-back period after that.

New Jersey will also receive more than $2 billion in federal funding, including:

• $1.34 billion in "state stabilization aid," most of which can be used to avert teacher layoffs by supplementing state aid;

• $652 million for highway and bridge projects and $524 million for mass transit improvements;

• $361 million in special education funding to help make up for a 20 percent shortfall in what the federal government has already promised to school districts; and

• $192 million in aid to poor school districts.

For more information, contact Melanie Willoughby. If you are looking for help for your business in these tough economic times, register for NJBIA's seminar: Surviving the Recession, Expert Advice for Running Your Business in Tough Times, which will be held from 7:45 a.m.-12:30 p.m., on Friday, April 3, at the Pines Manor, Route 27, Edison, NJ.

Meet the Governor's Top Advisors, Friday, February 27

Meet Governor Jon Corzine's new Chief of Staff, Ed McBride, Jr.; new Chief Counsel, William Castner, Jr.; and his new Policy Counsel, Michellene Davis at our first Meet the Decision Makers briefing of the year. Find out what the Governor has planned for the coming year! This great networking event will begin with registration and breakfast at 7:45 a.m. and ends at 10:00 a.m.

Register online or contact at 609-393-7707, ext. 213, for more information. To become a highly visible sponsor, contact at ext. 219.

Navigating Paid Family Leave in NJ, March 6 & 18

Starting in July 2009, employees will be able to take six weeks of paid leave each year for the birth or adoption of a child or to deal with a family member’s "serious health condition." Hear directly from top legal experts who will provide you with details on how the law will impact your workplace and how it will work with existing State and federal unpaid leave laws. Learn how to protect yourself and your business!

Register online for either the March 6 seminar at the Forsgate Country Club in Monroe Township or the March 18 seminar at the Sheraton in Eatontown. For more information, contact at 609-393-7707, ext. 239, or contact at ext. 219 to become an event sponsor.