Corzine told a group of small-business owners in south Jersey that the state's unemployment insurance fund has temporarily run out of money. The fund expects a cash boost from businesses to begin the second quarter on April 1, but until then it must borrow from Washington. The loan is interest-free, Corzine said.
"There is a standard procedure that is in place when you run down your unemployment fund," Corzine said.
New Jersey's unemployment claims have continued to rise as the recession deepens. They're running about double the number as last year.
Labor Department spokesman Kevin Smith said that about $75 million in claims were being paid out weekly as of Feb. 28, compared with $45 million in claims the prior year.
Unemployment claims are funded mostly through a payroll tax on businesses, with a smaller contribution from workers.
New Jersey began borrowing from the federal government on March 5, said Leni Fortson, of the federal Department of Labor in Philadelphia. As of March 19, the state had borrowed $120 million. Fourteen states are borrowing federal cash to pay for jobless claims, Fortson said.
New Jersey's fund has been depleted by years of raids by lawmakers of both parties, and as a result, is now chronically underfunded. About $4.7 billion has been diverted from the fund since 1993 to pay for charity care to hospitals and other programs.
"I wasn't there," Corzine said of the raids. "I put money in."
Corzine put $260 million in the fund last year to avoid an automatic tax increase to businesses. The increase is triggered when the fund falls below a certain threshold, measured on March 31.
Corzine's $29.8 billion budget proposal allocates another $150 million to the fund, about $120 million less than he said he would put into the fund in February. Additional help will come from the feds. However, that won't be enough to stop an automatic payroll tax increase to businesses on July 1 of about $90 per employee.
Had he not infused the fund with state money, a larger tax increase would have been triggered.
Bill Lloyd, an Avalon business owner who hosted Corzine Monday morning, said the tax increase is inevitable because of the sour economy.
Lloyd owns Avalon Coffee on Route 9 in Dennis Township, where Corzine spent 45 minutes hearing the financial concerns of six small business owners. Lloyd said he did not vote for Corzine in 2005, but the incumbent Democrat earned his vote this fall.