N.J.'s Unemployment Fund Is Running Out of Money

Gov. Jon S. Corzine says the fund has been overwhelmed

Monday, Dec 8, 2008  |  Updated 12:04 PM EDT
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N.J.'s Unemployment Fund Is Running Out of Money

Area residents are coping with being unemployed.

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New Jersey's unemployment fund is running out of money.

The Star-Ledger of Newark reports a spike in jobless claims has exhausted a $260 million infusion pumped into the fund five months ago.

Gov. Jon S. Corzine says the fund has been overwhelmed because lawmakers previously diverted more than $4 billion to cover the cost of state aid to hospitals.

The National Conference of State Legislators says New Jersey is not alone: A dozen other states have reserves of six months or less to cover benefits.

States pay for unemployment benefits through payroll taxes levied on employers.

Many state accounts face shortfalls due to increases in unemployment claims and a corresponding decrease in payroll tax revenue due to job losses.

Corzine says the state will either need to put money into the system or get help from the federal government.

Businesses would face an automatic $400 million tax increase in June if the fund continues to decline.

The fund had a balance of $750 million at the end of November.

The fund paid out $169 million last month compared to $138 million in November 2007.

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