Governor Jon Corzine is absolutely right to commit $270 million in funding to the Unemployment Insurance (UI) fund to prevent a huge automatic payroll tax increase on all employers, New Jersey Business & Industry Association President Philip Kirschner said today.  A huge tax increase would have done more damage to the State’s economy.

Corzine made the commitment to the UI fund while presenting his plan to cut what is now estimated to be a $3.6 billion budget deficit between now and the end of the fiscal year on June 30.  The weak economy has hurt State revenues drastically and, along with rising unemployment, has drained the balance of the State's UI fund.  If the fund’s balance drops below a certain level, federal law requires that payroll taxes be increased by nearly 25 percent.

"On behalf of NJBIA's 22,300 members, I offer my thanks to Governor Corzine for his commitment to keep the UI fund solvent and avoid a payroll tax increase," Kirschner said.  "A payroll tax is a tax on jobs, and at this time, in this economic environment, a tax on jobs would be devastating."

"Employers are struggling to hang on to the employees they have now," Kirschner said.  "If they have to pay more in taxes for each employee, it could lead to more job losses.  I believe that by avoiding this tax increase, the Governor is saving jobs."

Kirschner said that from the business community's viewpoint, the funding is returning a portion of what has been diverted from the UI fund in the past.  Corzine is the first governor in a long time who did not divert UI contributions.  But between 1993 and 2006, $4.7 billion in UI contributions were diverted to help balance past State budgets.  Obviously, if those contributions had not been diverted, the fund would be able to pay benefits without an additional revenue infusion.