TRENTON, February 17, 2009 – In an effort to avoid a business tax increase, Governor Jon S. Corzine today said he would redirect funds into the state's Unemployment Trust Fund which pays unemployment insurance benefits to workers who have lost their jobs through no fault of their own.

This is the second such payment ordered by Governor Corzine in the past nine months. In June 2008, Governor Corzine added $260 million to the fund to avoid triggering a business tax increase that would have approached $400 million in July of 2008. He is now adding another $270 million to help avoid triggering the tax increase this coming July.

The level of resources in the fund changes weekly as revenue comes in and benefits are paid out. During this national economic crisis, benefit payments in New Jersey, as in most states, have outpaced revenue into the UI Trust Fund.

In the 14 years from Fiscal Year (FY) 1993 through FY 2006, approximately $4.7 billion was diverted from building the reserves of the UI Trust Fund and those dollars were put to other purposes in the state budget. Governor Corzine ended that practice in his FY 2007 budget.

As of February 13, 2009, the cash balance of the New Jersey UI Trust Fund stood at $254.1 million. During the same week, New Jersey paid out nearly $75 million in unemployment insurance benefits.

The Unemployment Insurance law requires that the Trust Fund’s reserve ratio be calculated as of March 31 to determine the tax schedule for employer contributions for the fiscal year starting July 1, 2009.

New Jersey’s potential share of the $7 billion Unemployment Insurance Modernization provisions included in the recently-enacted American Recovery and Reinvestment Act is expected to be $207 million.  The funds will help to minimize required increases in employer wage taxes.

The assessment of the fund balance will determine rates for more than 240,000 New Jersey employers who pay into the UI Trust Fund.  Employers pay a range of different UI tax rates based on their “experience rating.” While different experience rating levels are assigned tax rates by rows in the tax table; the UI Trust Fund’s overall reserve ratio determines which column of the tax schedule is used.  Currently, the lowest range of tax rates is used.

New Jersey’s UI Trust Fund continues to pay unemployment insurance benefits.  In every state, even where the trust funds have been totally drained, unemployment insurance benefits can continue to be paid to unemployed workers through loans from the Federal UI Trust Fund.