O’Scanlon: Millions will be wasted on interest payments on UI fund if Murphy doesn’t act

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O’Scanlon: Millions will be wasted on interest payments on UI fund if Murphy doesn’t act

Senator Declan O’Scanlon has warned that New Jersey could waste tens of millions of dollars in interest payments on Unemployment Insurance Fund (UI) debt if Governor Phil Murphy does not act before the September deadline looming.

“It is absolutely ridiculous that Governor Murphy could waste millions on unnecessary interest payments on the Unemployment Insurance Fund debt when we have billions of federal relief funds in the bank that we could use to pay down the debt. debt in full before interest is due, “said O’Scanlon (R-Monmouth), a member of the Senate Budget and Appropriations Committee. “The governor has a short window of opportunity to work with the legislature to allocate the necessary funds before interest runs out. It makes no sense for Governor Murphy to throw tens of millions of dollars down the toilet when we have the means to act responsibly. “

According to the federal government’s Treasury Direct website, New Jersey currently owes $ 112 million at an interest rate of 2.2777% on funds borrowed to maintain the solvency of the state’s unemployment insurance fund. As noted in a footnote on this page, the accumulation of interest on borrowed funds has been deferred until September 6, 2021.

Unemployment Insurance Fund debt has jumped nearly 50% from last week when a Murphy administration spokesman said it stood at $ 75.2 million.

O’Scanlon asked why the Murphy administration continues to refuse to stabilize the state’s unemployment insurance fund with federal relief funds that have already been provided to New Jersey.

“We came up with a rock solid plan in March to use some of the $ 6.5 billion US bailout funds that arrived in New Jersey to shore up our UI fund and take the strain off taxpayers, struggling workers and employers, ”added O. ‘Scanlon. “If implemented, our plan would prevent unnecessary interest payments and end the $ 250 million payroll tax hike that the Murphy administration will start charging employers in October. Sadly, Governor Murphy refuses to recognize this rational solution to fixing New Jersey’s unemployment insurance fund and avoiding financial damage to businesses and taxpayers. We can only guess why.

New Jersey’s unemployment rate jumped last month to 7.3%, nearly 2 points above the national average.

In an appendix to the state budget for fiscal year 2022 (page 136), the Murphy administration estimated that the UI fund deficit – which would be met by more borrowed federal funds – could reach 931 million dollars by year end, as New Jersey’s economic recovery lags behind the rest of the nation.

At current rates, the annual interest owed on this debt could reach $ 20 million.

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