New Jersey’s business community got some good news in the first week of 2021. Gov. Phil Murphy signed a law to reduce future unemployment tax hike impacts, while also enacting a much-needed economic incentive program for New Jersey, after 18 months without one.
“Both of these laws are welcome news to start the new year,” said NJBIA Vice President of Government Affairs Christopher Emigholz, who lobbied for both pieces of legislation, with recommendations. “The reduction of looming tax hike impacts will bring a much-needed buffer to business owners and the tax incentive plan will hopefully give New Jersey more opportunity to create and retain jobs.”
New Jersey businesses were facing a potential $1 billion spike in payroll taxes this summer due to the depletion of the state’s Unemployment Insurance Trust Fund, which has paid out a record $20 billion in jobless claims during the coronavirus pandemic.
On Monday night, Gov. Murphy signed a bill, strongly supported by NJBIA, which phases in the UI tax increases over three years instead of hitting businesses with a massive tax increase all at once in July 2021.
NJBIA President & CEO Michele Siekerka said the bipartisan legislation was important for struggling businesses, which cannot afford a massive tax hike this summer when they are still trying to recover financial losses caused by the pandemic.
“New Jersey businesses have more than their share of taxes and regulations,” Siekerka said. “A payroll tax increase of this magnitude would have simply devastated our job creators. Spreading out this increase over three years makes this increase more palatable and helps give our businesses a fighting chance.”
Emigholz also notes the new law addresses both the overall health of the fund and business-specific experience ratings.
“It’s good news that the law holds employers’ experience ratings harmless for any unemployment benefits paid out during the pandemic,” Emigholz said. “It also includes a downward rate adjustment if the UI fund naturally recovers faster than expected. NJBIA lobbied for both these provisions.”
On Thursday, Gov. Murphy signed the $14.4 billion New Jersey Economic Recovery Act. New Jersey had been without an economic incentive program since July 2019.
Siekerka lauded the programs and highlighted their great need.
“We believe this is a comprehensive and balanced plan that comes at a most opportune time, as we work to recover from the pandemic,”” she said. “We are encouraged by the flexibility, depth and richness of the programs, with an emphasis on high-growth industries, ample opportunity for transformational projects, and checkpoints to ensure projects are benefitting our great state.”
She added, “With an economic plan of such enormous scope, there are always areas that can be improved upon, and we hope there will be further assistance for our challenged Main Street businesses. Going forward, NJBIA will continue to encourage revisits of the programs by our policymakers to ensure there is an appropriate balance of opportunity for businesses of all types and sizes in New Jersey.”
Siekerka also said Main Street businesses will need more than the $50 million allocated for them in the program.