Republicans pushing to force Murphy to call special session on UI tax issue

Republican members of the state Senate and Assembly have circulated a petition to Democrats in an effort to force Gov. Phil Murphy to convene a special session of the Legislature to prevent a payroll tax increase on employers that would help replenish and stabilize the state’s unemployment insurance fund.

Here what that means:

  • The state’s UI fund has been depleted and, so far, the state has not said it will use federal funds to replenish it — as nearly 30 other states have done;
  • If the state does not use federal funds, the business community will be hit with a three-year increase that could total as much as $1.7 billion in additional taxes, starting with $252 million for fiscal year 2022;
  • The petition is an attempt to force Murphy and the Legislature to act.

Republican moves such as this are usually just for show — and have no impact on the heavily Democratic-controlled Legislature. Whether that will hold true in this instance isn’t as clear.

So far, five Democrats have said they support using federal funds to help the business community, with Sens. Vin Gopal (D-Ocean Twp.) and Linda Greenstein (D-Cranbury) joining a chorus that includes Sens. Troy Singleton (D-Moorestown) and Dawn Addiego (D-Medford) as well as Assemblyman Roy Freiman (D-Hillsborough).

Senate Republican Leader Tom Kean (R-Westfield) is hoping other Democrats will join them on the issue.

“Gov. Murphy wants to raise taxes on small businesses and nonprofits that are struggling to survive the economic impact of the pandemic,” he said. “We’re calling on our Democrat colleagues who have witnessed the struggles of Main Street employers and listened to the desperate pleas of their constituents begging for help with unemployment to join us in petitioning the governor to call a special session of the Legislature.

“There is no reason for any Democrat in the Legislature to stand by and watch as Gov. Murphy inflicts unnecessary harm upon their constituents and other New Jerseyans. By joining us in signing the petition, they can make this a bipartisan call to action.”

Murphy spoke about the issue Aug. 23. He passed on the chance to directly say whether the state would or would not use federal funding to help pay down the $1.7 billion in additional payments — but he promised the state will be “doing more” in the weeks and months ahead.

“Folks should expect we will be doing more,” he said. “So, whether it’s specific or not to the unemployment insurance question, you should know that we are constantly thinking through how we can continue to plus up help and aid to small businesses, and we will do that.”

Republican leaders said interest on approximately $160 million of UI fund debt will begin accruing Sept. 6 at a rate of approximately 2.3%. The Murphy administration has projected borrowing will grow to $1 billion by the end of the fiscal year under the governor’s current approach to managing the fund, leading to tens of millions of dollars of interest payments at the expense of New Jersey taxpayers.

Assembly Republican Budget Officer Hal Wirths (R-Sparta) said this doesn’t add up.

“We have billions of (dollars in) federal aid that could be used to avoid massive tax increases on businesses still trying to survive the pandemic,” he said. “It would be unconscionable for Democrats in the Senate and Assembly to let Gov. Murphy get away with yet another tax increase on businesses when the state has the funds to avoid it.”

The petition to call a special session was drafted pursuant to Article IV, Section I, Paragraph 4 of the New Jersey Constitution, which states, in part, “Special sessions of the Legislature shall be called by the governor upon petition of a majority of all the members of each house …”

All 14 Republican members of the Senate and 28 Republican members of the Assembly have signed the petition.

It would only take the signatures of seven Democrats in the Senate and 13 in the Assembly to provide the majority needed in each house to force Murphy to call a special session.