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Current Proposal Would Breach Federal Agreement, Lead to Loss of Additional $25 Per Week for Current Beneficiaries

(TRENTON) — Senator Fred Madden and Assemblyman Joseph Egan, chairmen of the Senate and Assembly labor committees, respectively, today said they are committed to seeking a compromise that would protect the state’s jobless from seeing any cut to their current unemployment benefits while also insulating businesses from a scheduled increase in their unemployment insurance taxes.

Madden and Egan said such an agreement is necessary after they received notice from the nonpartisan Office of Legislative Services that a proposed cut in state benefits would negate a 2009 agreement with the federal government and would lead to an immediate loss of $25-per-week in federal funds to all current and future beneficiaries.

“Cutting benefits for future unemployed would have an unintended consequence of cutting benefits to all unemployed New Jerseyans,” said Madden (D-Gloucester/Camden). “Right now, the unemployed and their families need every penny to keep their heads above water. This makes it even more important for us to work with the administration to strike an agreement that properly balances the needs of the unemployed and the business community.”

“We need a workable agreement that doesn’t risk federal funding that has proven so valuable to New Jersey families hit hard by this recession and struggling to make ends meet,” said Egan (Middlesex/Somerset). “A plan that ends up cutting benefits for all out-of-work New Jerseyans would just add more pain to an already difficult situation. We need an agreement that meets the needs of both workers and businesses.”

Under a 2009 Federal Additional Compensation (FAC) agreement between the state and the federal Department of Labor, each New Jerseyan collecting unemployment receives a $25-per-week federal benefit. Reducing unemployment benefits for future beneficiaries, however, would also immediately void the agreement, leading to a loss in funds to the currently unemployed.

The legislators said the impending loss of federal funds makes any plan to reduce current state benefits “regressive and wholly unworkable.”

They noted that since the federal match is a firm $25 per jobless resident, those on the lower end of the unemployment benefits scale would lose a greater percentage of their weekly benefit.

Madden and Egan said they are drafting legislation to allow the UI tax schedule to increase by only one increment over the next year, as Gov. Chris Christie proposed. However, any future increase should be determined only after taking a careful look at both economic conditions and the health of the fund in 2011.

“Finding a way to help the businesses that employ our residents and keep our economy moving is paramount,” Egan said. “But we must do so in a way that doesn’t hurt workers and risk the federal help that has proven so vital to so many.”

No doubt, we need to do what we can to protect businesses from the impact of a higher UI tax,” said Madden. “But before we lock ourselves into a three-year ramp up, we should make sure we do our due diligence and take a careful look at the situation one year from now and then act accordingly.”

The lawmakers also said they would work in partnership with Gov. Christie and his administration in seeking both zero-percent interest and partial forgiveness on prior federal loans the state accepted to bolster the UI fund. They also said they would work with the Governor a bipartisan statewide campaign to ensure passage this November of a state constitutional amendment to prevent the fund from ever again having its monies diverted.

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