ASSEMBLY APPROPRIATIONS COMMITTEE

 

STATEMENT TO

 

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 1786

 

STATE OF NEW JERSEY

 

DATED: MAY 1, 1996

 

      The Assembly Appropriations Committee reports favorably an Assembly Committee Substitute for Assembly Bill No. 1786.

      This committee substitute establishes an Emergency Unemployment Benefits Program and provides up to 13 weeks of additional unemployment benefits to claimants who have exhausted their entitlement to regular unemployment benefits. The committee substitute is intended to assist a growing number of unemployed workers who have exhausted their claims for regular unemployment and have remained unemployed, in light of the more restrictive trigger mechanism under the amended "Federal-State Extended Unemployment Compensation Act of 1970," (26 U.S.C. §3304 fn.). The program will extend through October 1, 1996, except that it will automatically terminate if the Federal-State Extended Benefits Program or any federally funded supplemental benefits program is triggered, or if the Total Unemployment Rate falls below 6%. Total benefits expenditure is capped at $350 million.

      The substitute also makes changes in the funding of the unemployment compensation fund as follows:

      1. No payroll taxes will be collected from workers from April 1, 1996 through December 31, 1997; on and after January 1, 1998, the rate is set at 0.4%, 0.2 percentage points less than the current rate of 0.6%.

      2. Starting on July 1, 1997, the fund reserve ratios used to determine which tax schedule is applied to employers are reduced, which will make it easier in the future for tax schedules to go into effect which will result in lower tax rates for employers in most cases. The fund reserve ratio that "triggers" tax schedule "A," which is the lowest tax rate schedule, is reduced from 10% to 5%. The trigger for schedule "B" is reduced from 7% to 4%, the trigger for schedule "C" is reduced from 4% to 3% and the trigger for schedule "D" is reduced from 2.5% to 2%. The only increased reserve ratio is the trigger for a 10% tax surcharge, which is increased from 0 to 1%.

      3. If the fund reserve ratio declines to a level below 3.00% on March 31 of either 1998 or 1999, the Treasurer will transfer the amount necessary to raise the reserve ratio to a level of 3.00%, thereby preventing the imposition of schedule "D" tax rates on employers during those years.