A Citizen’s Guide to Ballot Question One

CONSTITUTIONAL AMENDMENT TO DEDICATE ASSESSMENTS ON
WAGES BY THE STATE TO THE PAYMENT OF EMPLOYEE BENEFITS

Shall the amendment to Article VIII, Section II of the State Constitution, agreed to by the Legislature, which: prohibits collection by the State of assessments based solely on employee wages and salaries for any purpose other than providing employee benefits; dedicates all employer and employee contributions collected for any employee benefit fund, and all returns on investments of those contributions, to the purpose of that fund; and prohibits any transferring, borrowing, appropriating or using of those contributions or returns for any other purpose, be approved?

On November 2, New Jersey will vote on one statewide ballot question, which proposes a Constitutional Amendment to dedicate employee benefit funds to their intended purpose and prohibit future legislative diversions.

New Jersey workers and employers contribute to various employee benefit funds, such as Unemployment Insurance, Temporary Disability Insurance and Family Leave Insurance (Paid Family Leave). The largest and most volatile of these funds is Unemployment Insurance (UI).

From 1992-2007, legislatures have diverted approximately $5.4 billion from these benefit funds to the state’s general fund. The primary beneficiary of the funding shift was Charity Care, which reimburses New Jersey doctors and hospitals who provide care for the uninsured. $4.7 billion of the diversions were from the UI fund.

The diversions from UI left the fund vulnerable to the unemployment spike that resulted from the recent recession. New Jersey is now borrowing from the federal government to make payments to unemployment insurance beneficiaries, and about $500 million in business tax increases have been automatically triggered to replenish the fund.

Should the Amendment pass, all employee benefit monies, including UI, would be required to be deposited into their dedicated funds and used for their intended purpose.

Supporters of the Amendment argue that this will help prevent future insolvency in New Jersey employee benefit funds by securing them from legislative raids. Opponents note that the Amendment would do nothing to address the current deficits and tie the hands of future legislatures during difficult budget cycles.

A “YES” vote on Question One is a vote to pass the Constitutional Amendment and protect the employee benefit funds. A “NO” vote is a vote against the amendment and maintains the status quo, allowing for future legislative diversions.

New Jersey voters with questions regarding this issue should e-mail [email protected].