The Insolvency Spreads In New Jersey

First it was the Transportation Trust Fund. Then it was the pension funds for government workers.

Now it's the unemployment insurance fund, which is coming close to a mandatory triggering of unemployment tax increases.

Gov. Jon Corzine's labor policy group has warned that the state's unemployment insurance (UI) fund -- formed to help pay unemployment benefits but also used by the state to help hospitals pay for treating the uninsured -- is "dangerously close to insolvency."

The state has taken $4.67 billion from the UI fund since 1993, leaving it with a projected balance of about $1 billion on March 31, an amount barely above a mandated trigger that would automatically increase unemployment taxes on employers by as much as $400 million.

The reason for the shortfall? State legislators raiding the fund year after year in one-shots to balance earlier budgets. Robbing Peter to pay Paul - and taxpayers have to pay for it all.

Instead of getting costs under control, spending under control, and managing the state in a fiscally responsible manner, New Jersey finds new ways to mismanage the budget.

New Jersey is one of only three states that collect unemployment taxes from employers and employees. Most states fund such benefits entirely from employer taxes.

New Jersey is also the only state that allows unemployment tax revenue to be redirected to other purposes.

The fund had about $3 billion in it four years ago. It provides about $2 billion per year in unemployment benefits.

This year's $28 billion state budget relied on $350 million from the unemployment fund to pay for treating the uninsured.

While there have been some politicians who have complained about raiding the fund, the powers that be in Trenton have had no problem dipping into the fund instead of making the tough choices to cut spending or pet programs.