Lawmakers call on Murphy to use federal stimulus funds to offset increase in payroll tax

New Jersey’s business community is taking another hit as the Murphy administration announces a payroll tax increase set to take effect this fall.

News 12 Staff

Aug 17, 2021, 12:05 AM

Updated 970 days ago

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New Jersey’s business community is taking another hit as the Murphy administration announces a payroll tax increase set to take effect this fall.
Officials with the administration say that state law requires the increase to replenish the unemployment fund. But there are bipartisan calls to use stimulus money to offset the cost.
“Every single dollar makes a difference to New Jersey’s small businesses,” says Michele Siekerka with the New Jersey Business and Industry Association.
Businesses owners say that they have been ravaged by the COVID-19 pandemic, shutdowns, labor shortages and inflation.
“It's very complicated, but the easy thing to understand is that New Jersey businesses cannot afford a single, another dollar taxed to them at this point in time,” says Siekerka.
Gov. Phil Murphy is still on vacation in Italy. Following an event in New Brunswick Monday afternoon, acting Gov. Sheila Oliver suggested the administration's hands were tied by state law.
“The Legislature devised the process by which we had to replenish the unemployment trust fund,” she says. “It is a formula, it is in the statute. And so the process exists. We're committed to that process right now and if the Legislature goes in a different direction, time will tell.”
According to the state Department of Labor, "Adjustments in the payroll tax rate are possible every year, and are based on the balance in the Unemployment Trust Fund, which is used to pay unemployment benefits….Gov. Murphy signed legislation lessening the impact of unemployment tax rate increases by extending them out over three years, as opposed to a single year."
The increase on each business will be different, and will largely depend on the number of employees and how much turnover there is. But the unemployment trust fund needs to raise more than $800 million over the next three years.
Republicans and Democrats in the Legislature Monday called on Murphy to use some of the millions in federal stimulus money from the Biden administration to soften the blow to New Jersey businesses.
“We're not blaming Gov. Murphy for the fact that we have to replenish the fund, we're just saying use federal dollars to help us, that's the intention,” says Siekerka.
A Murphy administration spokesperson said using stimulus money is under consideration. The Labor Department says businesses will first feel the increase when they file their third-quarter taxes by Oct. 30.


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