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Bucco

Says "an unchecked Democratic Majority in Trenton" is responsible for "years of diversions" from the state’s unemployment insurance trust fund.

Anthony Bucco on Tuesday, May 1st, 2012 in a news release

State Sen. Anthony Bucco claims Democrat-led Legislature is responsible for diverting money from unemployment benefits fund

Democrats have been in control of the New Jersey Legislature for so many years that they can be held responsible for many of the state’s financial woes.

But when it comes to diverting money from the state’s unemployment benefits fund, the Republican-led Legislature of years past deserves its share of the blame as well.

In a May 1 news release, however, state Sen. Anthony Bucco (R-Morris) targeted "an unchecked Democratic Majority in Trenton" for diverting money from that fund, which is used to pay unemployment benefits to people who worked in New Jersey.

"The Administration is to be applauded for putting the state’s unemployment insurance fund on the path to solvency more quickly than anyone expected," Bucco said in the news release. "Through a combination of tax reforms, efficiencies, and aggressive prosecution of fraud and abuse, this Governor has fixed the mess he inherited as a result of years of diversions and fiscal irresponsibility by an unchecked Democratic Majority in Trenton."

The senator’s claim is largely wrong, PolitiFact New Jersey found. About 67 percent of the roughly $4.6 billion in total diverted funds was due to legislation passed by the Republican-controlled Legislature between 1992 and 1997, according to the state’s nonpartisan Office of Legislative Services.

Due in part to the fund diversions -- as well as the increased demand for unemployment benefits -- the fund was depleted by March 2009 and New Jersey began borrowing from the federal government to cover benefit payments. State officials anticipate paying off the loan by May 2014.

Starting with a law enacted in late 1992, a total of about $4.6 billion has been diverted from the trust fund to cover charity care payments to hospitals, according to the OLS.

The Republican-led Legislature approved legislation in 1992, 1996 and 1997 that led to the diversion of $3.141 billion, representing about 67 percent of the total diverted funds.

In 2002 and 2003, Democrats controlled the State Assembly and the two parties shared control of the Senate. During those two years, legislators approved diverting $1.1 billion, or about 23 percent of the total funds.

After Democrats took full control of both houses in 2004, the Legislature agreed to divert $450 million, which is about 10 percent of the total funds.

Adam Bauer, a spokesman for the Senate Republicans, acknowledged that Republicans also diverted money from the trust fund. But he argued that the trust fund balance still increased when the GOP was in the majority.

"Bucco’s line about ‘fiscal irresponsibility’ holds up because a diversion when the fund is not being stressed because of high unemployment and is approaching its record high fund balance is not irresponsible, but a diversion when there is high stress on the fund because of job loss and the fund is nearing a record low is irresponsible," Bauer said in an e-mail.

Joseph Henchman, vice president of Legal & State Projects for the business-backed Tax Foundation, said he could understand both holding money in reserve as well as ensuring it "doesn't grow so large as to create pressure for unnecessarily higher benefits or beyond any possible future needs."

"I can see both sides on this: on one hand, you want the fund to have enough in reserve to pay benefits when the economy dips, but you also don't want to accumulate funds beyond what you need," Henchman told us in an e-mail.

Our ruling

In a May 1 news release, Bucco claimed in regard to the state’s unemployment benefits fund that Gov. Chris Christie "has fixed the mess he inherited as a result of years of diversions and fiscal irresponsibility by an unchecked Democratic Majority in Trenton."

Both political parties are responsible for diverting money from the trust fund. But of the roughly $4.6 billion in total diverted funds, about 67 percent of that was approved by the Republican-led Legislature between 1992 and 1997.

We rate the statement Mostly False.

To comment on this ruling, go to NJ.com.

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About this statement:

Published: Monday, May 7th, 2012 at 7:30 a.m.

Subjects: State Budget

Sources:

New Jersey Senate Republicans, UI Solvency, Private Sector Job Growth Show New Jersey’s Economy on Right Track, May 1, 2012

PolitiFact New Jersey, New Jersey’s unemployment benefits fund is broke, with more than $1 billion owed to the federal government, Dec. 11, 2011

New Jersey Office of Legislative Services, Analysis of Fiscal Year 2011-2012 Budget for New Jersey Department of Labor and Workforce Development, April 2011

New Jersey Unemployment Insurance Task Force Report, Feb. 25, 2011

New Jersey Department of Labor and Workforce Development, Testimony of Commissioner Harold Wirths before the Senate Budget and Appropriations Committee, May 1, 2012

New Jersey Office of Legislative Services, Analysis of Fiscal Year 2012-2013 Budget for New Jersey Department of Labor and Workforce Development, May 2012

E-mail interview with Adam Bauer, spokesman for the New Jersey Senate Republicans, May 2, 2012

New Jersey Policy Research Organization Foundation, NJ Unemployment Insurance Trust Fund Diverted Revenues, Low Balance Threaten Fund’s Health, Summer 2006

Tax Foundation, Unemployment Insurance Taxes: Options for Program Design and Insolvent Trust Funds, October 2011

E-mail interview with Joseph Henchman, Vice President of Legal & State Projects for the Tax Foundation, May 2, 2012

E-mail interview with Daniel Smith, assistant professor of public budgeting and financial management at New York University, May 2, 2012

Written by: Bill Wichert
Researched by: Bill Wichert
Edited by: Caryn Shinske

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