A5151 —

A5151 AAP1R StatementFISCAL 12/15/20ESTIMATE ASSEMBLY  APPROPRIATIONSLEGISLATIVE COMMITTEEFISCAL  ESTIMATE STATEMENT[First TOReprint]   ASSEMBLY, No.

5151   with committee amendments   STATE OF NEW JERSEY 219th LEGISLATURE   DATED:

 DECEMBERDECEMBER 15,22, 2020         SUMMARY The  AssemblySynopsis: Appropriations Committee favorably reports, with committee amendments, Assembly Bill, No.

5151.Concerns emergency unemployment benefits and shared work benefits.

     Type This bill provides eight weeks of emergencyImpact: unemployment insurance (UI) benefits during the period from December 22, 2020 to February 27, 2021, or to the calendar week in which total expenditures of emergency UI benefits first exceed $350 million if the conclusion of that week occurs before February 27, 2021, to individuals who exhaust all other UI benefits.

 TheIncrease billin providesexpenditures the emergency UI benefits to individuals who have exhausted their regular State UI benefits, any State or federal extended UI benefits, and any other federal UI benefits, including the Pandemic Unemployment AssistanceInsurance (PUA)Compensation benefitsFund. that are provided to certain self-employed workers, gig workers, and other workers who are not eligible for regular State UI benefits, except that emergency UI benefits are not provided to any individual for whom the only UI benefits exhausted were PUA benefits, and for whom no contributions were made by, or on behalf of, the individual to the UI trust fund during the period used to determine the individual’s eligibility for UI benefits.  The amount of the weekly emergency UI benefit paid to an individual is the same as the amount the individual was paid in regular State UI benefits, or in PUA benefits, as applicable.

       TheAgencies emergencyAffected: UI benefits provided by the bill from the State’s UI trust fund are funded entirely by the State, that is, without any federal funding such as the 50 percent federal funding provided for extended UI benefits pursuant to P.L.1970, c.325 (C.43:21-24.11 et seq.).  No employer's individual UI account is charged for emergency UI benefits paid pursuant to the bill, although the payment of the emergency UI benefits will affect the balance of the State’s UI trust fund and therefore the reserve ratio of the entire UI fund, which is used to determine which of the tax schedule “columns” apply to all employers pursuant to the UI Tax Experience Rating Table located in R.S.43:21-7(cc)(5)(E)(vii).

     Department The bill also provides that the actions that the Division of UnemploymentLabor and TemporaryWorkforce DisabilityDevelopment. is required by section 5 of P.L.2020, c.57 (C.43:21-20.13) to undertake to help employers obtain federal funding of shared work UI benefits shall continue to be required as long as the federal funding is available or, in certain cases, after federal funds are no longer available.  The actions which would not continue to be required when the federal funds are no longer available involve providing guidance to employers to obtain those federal funds, but those requirements would be reinstated if federal funding was reinstated.  The actions which will continue to be required after the ending of the availability of the federal funding are:

       1.    providingOffice anyof eligibleLegislative employerServices withEstimate guidanceFiscal inImpact making  an  applicationExpenditure Increase – Unemployment Insurance Compensation Fund Up to $350 Million         ·         The Office of Legislative Services (OLS) projects that this bill may increase expenditures from the Unemployment Insurance (UI) Compensation Fund by up to $350 million, which would be realized by the bill’s extended eligibility for approvalweekly unemployment benefits.  The OLS does not have enough information to estimate the number of aextended sharedemergency workunemployment program;benefits claims.

       2.  ·         permittingThe submissionOLS andnotes approvalthat ofthe applicationsUI toCompensation participateFund inwill abe sharedfully workliable programfor inthe advanceexpenditures as it will not receive any amount of thefunding datefrom benefitsthe commence;federal government;

     extended 3.  UI permittingbenefits employersare whotypically havefunded fully laid off employees to resume employing those employees on a partial50-50 basisState/federal andbasis. establish a shared work program making benefits available to those employees;

and       ·         4.  The permitting,OLS uponfurther approvalnotes ofthat, ain sharedAugust workof program,2020, the paymentState ofbegan benefits retroactively back to thetake timefederal thatloans theto applicationsupport wasState madeUI forbenefits. approval of a shared work program.

The State UI Compensation Fund is currently in deficit.  As of December 14, the State has an outstanding federal UI loan balance of $602 million.  The OLS notes that if the bill is enacted, the fund may take longer to regain solvency, because the bill will likely add $350 million to the UI Compensation Fund deficit.    COMMITTEE  AMENDMENTS:BILL DESCRIPTION        This bill provides eight weeks of emergency unemployment benefits during the period from December 22, 2020 to February 27, 2021, or to the calendar week in which total expenditures of emergency unemployment benefits first exceed $350 million, if the conclusion of that week occurs before February 27, 2021, to individuals who exhaust all other unemployment benefits.

      The committeebill amendedprovides the billemergency tounemployment excludebenefits fromto receivingindividuals emergencywho UIhave benefitsexhausted anytheir individualregular forState whomunemployment thebenefits, onlyany UIState benefitsor exhaustedfederal wereextended PUAunemployment benefits, and forany whom,other duringfederal theunemployment periodbenefits.  usedThe toamount determineof the individual’sweekly eligibilityemergency forunemployment thebenefit UIpaid benefits,to noan contributionsindividual wereis madethe tosame as the UIamount trustthe fundindividual by,was paid in regular State unemployment benefits, or onin behalfpandemic of,unemployment theassistance individual.(PUA) benefits, as applicable.

     The emergency unemployment benefits provided by the bill would be funded entirely by the State.  No employer's account would be charged for emergency unemployment benefits paid to an unemployed individual pursuant to the provisions of the bill.

     The provisions of the bill would not apply to individuals for whom the only unemployment benefits exhausted were PUA benefits and for whom, during the base year or other period used to determine the individual’s eligibility for the unemployment benefits which the individual exhausted, no contributions were made to the UI Compensation Fund by the individual or by an employer on behalf of the individual.

       FISCAL ANALYSIS   EXECUTIVE BRANCH         None received.

  OFFICE OF LEGISLATIVE SERVICES         The OLS projects that this bill may increase expenditures from the UI Compensation Fund by up to $350 million, which would be realized by the bill’s extended eligibility for weekly unemployment benefits.  The OLS does not have enough information to estimate the number of extended emergency unemployment benefits claims.

      The OLS notes that the UI Compensation Fund will be fully liable for the expenditures as it will not receive any amount of funding from the federal government;

extended UI benefits are typically funded on a 50-50 State/federal basis.

      The OLS further notes that, in August of 2020, the State began to take federal loans to support State UI benefits.

The State UI Compensation Fund is currently in deficit.  As of December 14, the State has an outstanding federal UI loan balance of $602 million.  The OLS notes that if the bill is enacted, the fund may take longer to regain solvency, because the bill will likely add $350 million to the UI Compensation Fund deficit.  Under federal law, the interest on a federal UI loan used to fund UI benefits cannot be paid from the states' UI trust funds.  Federal advances taken in 2020 are interest-free if repaid by December 31, 2020.  Unless new federal legislation extends the period of interest-free advance, interest will begin to accrue on January 1, 2021, and if a federal UI loan balance is still outstanding after two years (in 2022), employers are required to make payments toward the outstanding federal loan balance in the form of a federal unemployment insurance (FUTA) credit reduction that increases the FUTA taxes employers pay.

      For purposes of background, the weekly benefit rate is capped at a maximum amount based on the State minimum wage.  For 2020, the maximum weekly benefit rate is $713.  The Division of Unemployment Insurance in the Department of Labor and Workforce Development calculates an individual’s weekly benefit rate between 60 percent and 75 percent, depending on the number of dependents, of the average weekly wage earned by the individual during the base year, up to that maximum.  The division determines the average weekly wage based on wage information as reported by an individual’s employer.

    Section:

Commerce, Labor and Industry Analyst:

Juan C.

Rodriguez Senior Fiscal Analyst Approved:

Thomas Koenig Assistant Legislative Budget and Finance Officer     This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

  This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).