CHERRY HILL — Reaction was mixed Tuesday to Gov. Chris Christie's plan to offset the inevitable hike in employer payroll taxes.
On one hand, employers already badgered by the economy are in no mood for more taxes. They also are angry that the tax is necessary because leaders of both parties have repeatedly used the fund for other purposes.
Still, Christie's plan to limit the increase per average employee to about $130 a year is far better than the existing formula of $400 per employee. Changing that will require approval of the Legislature, which Democrats control.
New Jersey's Unemployment Trust Fund is insolvent with $1.3 billion in debt to the federal government. New Jersey's unemployment benefits also are the second highest in the nation.
In keeping with Christie's mantra to share the pain, he wants employers to pay substantially less to replenish the fund and to pay less to the unemployed. His proposal would drop the $600 a week maximum to $550. He also wants a one-week waiting period before benefits kick in and additional penalties for those fired for "misconduct."
An alternative plan set forth by some South Jersey legislators supports the downgraded employer tax increase, but not a reduction in benefits.
The governor also urged both parties to pass a constitutional amendment that would prevent the trust fund from being used for anything but jobless claims in the future.
"We are open to any plan that would mitigate this increase. Billions were raided from the fund over the years because nobody wanted to believe there would come a time that our economy would be in such dire straits that we would need to support an 10 percent unemployment rate," said Kathleen Davis, vice president and chief operating officer of the Chamber of Commerce of Southern New Jersey.
Reluctantly, the chamber also supports decreased benefits for the unemployed.
"We're willing to go along with the governor on this because the fund is depleted and it has to be replenished. Generally, we don't support any tax increase, but what's the point when this one is lawful and unavoidable?" said Davis, on behalf of the chamber's 1,700 members.
Arthur Campbell, president of the 1,000-member Camden County Regional Chamber of Commerce, prefers a more equitable distribution of the debt.
"This fund was used as a cash cow by governors of both parties and now the burden is on us," he said. "I think it would be more fair if the cost was spread out in a statewide bond issue than saddling the business community with it all."
Jason Ravitz employs about 1,000 people in a family business that owns five ShopRites in Camden and Gloucester counties.
"Why am I paying anything to reconstitute an insolvent fund that my family has been paying into for decades. It's very frustrating. I need to analyze other changes in the budget to understand the overall impact on myself and the business. Hopefully, things are changing in this state, but I have to see how it all plays out."
Other changes proposed by Christie that would affect the business community are:
Eliminating a 4 percent surcharge on the Corporate Business Tax.
Restoring the top gross income tax rate to 8.97 percent from 10.75 percent.
Eliminating some business incentive programs.
Reach Eileen Stilwell at (856) 486-2464 or estilwell@courierpostonline.com
Monday, September 06, 2010
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