Menendez: Feds won’t bail out unemployment insurance fund

Monday, March 1, 2010
Last updated: Monday March 1, 2010, 6:48 PM
BY CLAIRE HEININGER

STATE HOUSE BUREAU

TRENTON — The federal government will not bail out New Jersey’s insolvent unemployment insurance fund, but it may find ways to lessen the state’s burden, U.S. Sen. Robert Menendez said Monday.

With 27 states having borrowed about $30 billion from the feds to pay their unemployment claims, it is “just not possible” to cover all of the costs “in this budget climate,” Menendez (D-N.J.) said following a meeting of New Jersey’s congressional delegation with Governor Christie. Menendez said he would work to delay New Jersey’s interest payments, or perhaps forgive them entirely, to provide some degree of federal help.

The interest payments of about $180 million would be due in 2011, state Labor Commissioner Hal Wirths said, adding “any help would be great.”

But with the state’s entire $1.2 billion and growing debt unlikely to be forgiven, the Republican governor and Democratic lawmakers will have to arrive at a plan that would continue to fund benefits. Christie has proposed cutting benefits for future unemployed workers to help reduce a tax hike on employers that is set to take place in July, but Democrats who control the Legislature called the plan dead on arrival.

Christie, acknowledging Monday there was less federal support than he had hoped for, said “we can’t be expecting miracles” from Washington.

“We have our own problems we have to deal with in New Jersey. Many other states have these problems, and from the federal perspective they have to deal with the whole,” the governor said. “Of course they’ll be fighting for New Jersey to get the best deal that we possibly can.”

Senate Majority Leader Barbara Buono (D-Middlesex) said it is “unfortunate” that more federal help isn’t available, but Democrats will work with the governor on a solution that doesn’t cut worker benefits. Any state cuts also could threaten the extra $25 a week workers get from the federal government, making it “more devastating,” she said.

The unemployment insurance fund, which is filled mostly through taxes on employers, has been used over the years by state politicians in both parties for other purposes.

Now with New Jersey´┐Żs unemployment rate hovering around 10 percent, the state has run out of money to pay benefits, triggering a tax hike that would take effect in July.

Claire Heininger may be reached at (609) 989-0273 or cheininger@starledger.com.

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