Better late than never — a New Jersey tradition

There’s nothing like a crisis to get New Jersey legislators moving. Too bad they rarely move until the crisis occurs.

Consider the legislation Steven Sweeney announced today that would prohibit the state from dipping into its unemployment insurance fund to balance its budget. It seems like a logical proposal — until you consider the history behind it, outlined in today’s Star-Ledger.

State lawmakers in recent years “diverted more than $4 billion from it to cover the cost of state aid to hospitals,” which depleted the fund just unemployment started to rise. That’s helped shrink the fund from about $3 billion four years ago to $161 million earlier this year, the Ledger said, “not even enough to meet one month’s worth of claims.” That, says Gov. Corzine, has forced state government to scramble to cover an expected shortfall.

“Now the piper is coming home to roost,” Corzine said. “We have to pay that piper. We have to do that either by putting money into that system from some other place, or we’re going to have to get help from the federal government.”

The unemployment fund, of course, is no different than any other fund at the state’s disposal. Over the last two decades, the state repeatedly has sought ways to offset increased spending my moving money between accounts, whether it has been selling roadways to itself, raiding the pension fund or borrowing against health benefits. In each case, as the governor puts it, the piper is now asking for payment.

The payment, in this case, could be “an automatic $400 million tax hike next June” on businesses that John Rogers, vice president of human resource issues for the New Jersey Business and Industry Association, told the Ledger “would certainly devastate New Jersey’s economy.”

The business group — which pays “about $2 billion a year into the fund” — had feared that the diversion would create problems down the road.

“We warned the diversions the Legislature has done to the fund would come home to roost at the worst possible time,” said Rogers. “We’re hemorrhaging money out of a fund that was almost insolvent.”

Hence, the Sweeney bill:

“If we start thinking about the future a little bit we won’t run into the crises that we are facing today,” said state Sen. Stephen Sweeney (D-Gloucester), sponsor of the measure (SCR-60). “We have to start thinking about the future.”

The Senate Labor Committee held a brief public hearing on Sweeney’s measure, which would allow voters next November to consider a Consititutional Amendment that would ban diversions from employee benefit funds like the Unemployment Insurance Trust Fund, the workers compensation Second Injury Fund and the state Temporary Disability Fund.

It’s a great idea. Too bad he didn’t put it on the table years ago.

Author: hankkalet

Hank Kalet is a poet and freelance journalist. He is the economic needs reporter for NJ Spotlight, teaches journalism at Rutgers University and writing at Middlesex County College and Brookdale Community College. He writes a semi-monthly column for the Progressive Populist. He is a lifelong fan of the New York Mets and New York Knicks, drinks too much coffee and attends as many Bruce Springsteen concerts as his meager finances will allow. He lives in South Brunswick with his wife Annie. View all posts by hankkalet