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New Jersey’s fiscal history is not going to repeat itself, if Chris Christie has anything to say about it.
In particular, that means no more raiding the state’s Unemployment Insurance Trust Fund to plug budget holes – a practice he alleges occurred during the Corzine and other administrations.
"The people who were running the budget, in the Corzine years, decided to steal from the unemployment trust fund. … As did other Governors before," Christie said on the March 25 ‘Ask the Governor’ radio program on NJ 101.5-FM. "We simply don’t do that, haven’t done it, and won’t permit it."
There’s a degree of accuracy to what the governor said but for this fact check, it’s equally important to look at what he didn’t say.
First, some background on the state’s Unemployment Insurance Trust Fund.
Payroll taxes paid by employees and employers comprise the fund. That money is used to build up reserves in good economic times so unemployment benefits can be paid during economic downturns. The fund pays unemployment benefits to people who worked in New Jersey.
But that’s not what happened, especially after both parties spent years diverting fund money to cover charity care payments to hospitals, ultimately reaching $4.6 billion by 2005. Then the recession hit and unemployment claims started pouring in around 2008.
The fund was near empty by March 2009 and New Jersey had to borrow more than $1 billion from the federal government to cover expenses. That loan is on track to be repaid by March 2014, said Frank W. Haines III, assistant legislative budget and finance officer for the nonpartisan Office of Legislative Services.
About a year ago, state Sen. Anthony Bucco (R-Morris) claimed an "unchecked Democratic Majority in Trenton" was largely responsible for the frequent fund diversions, but PolitiFact New Jersey ruled that claim Mostly False. While both political parties were responsible for diversions, the OLS told us that about 67 percent of the roughly $4.6 billion in total diverted funds resulted from legislation passed by the Republican-controlled Legislature between 1992 and 1997.
So where does Corzine come in? Despite Christie’s claim, Corzine was the first governor in years to stop diverting money from the fund. But he authorized a $260 million payment into the fund so claims could be paid, as well as borrowing from the federal government.
Money from the fund has not been diverted since fiscal year 2006, which was actually calendar year 2005, Haines explained. The governor at that time was Richard Codey, not Corzine. Codey served 10 months as interim governor after Democrat Jim McGreevey resigned. Corzine became governor in January 2006.
So Christie is wrong to pin diversions on Corzine, but Corzine still bears some blame, said Michael Drewniak, a Christie spokesman.
"The Governor has said many times that both parties were guilty of raiding the UI fund; Governor Corzine’s borrowing extended and compounded the problem," Drewniak said in an e-mail, noting that Christie was speaking colloquially when he used the word ‘stealing.’ "There’s been other equal opportunity failures too, pension underfunding comes immediately to mind. The Governor has always said there’s plenty of blame to go around for prior fiscal mismanagement, but he also always emphasizes the need for bipartisanship to fix all those things that set us back."
Drewniak also noted that Christie said of the fund’s diversions, "We simply don’t do that, haven’t done it, and won’t permit it."
That’s probably because the governor supported a ballot question giving taxpayers the say-so for future diversions. Taxpayers approved the measure in 2010. As a result, state law forbids the diversions Christie claims he "won’t permit."
Christie said, "The people who were running the budget, in the Corzine years, decided to steal from the unemployment trust fund. … As did other Governors before. We simply don’t do that, haven’t done it, and won’t permit it."
The governor’s claim contains an element of truth, that other administrations have diverted money from the fund, but his hasn’t. The reason? State law now forbids such diversions – something he didn’t say. Although Christie was speaking colloquially about ‘stealing’ from the fund, he was wrong when he pegged diversions to the Corzine administration. The last time such a diversion occurred was when Codey was interim governor. We rate Christie’s statement Mostly False.
To comment on this story, go to NJ.com.
NJ 101.5 FM "Ask the Governor" program, March 25, 2013, accessed April 8, 2013
Phone interview with Frank W. Haines III, spokesman, Office of Legislative Services, April 8, 2013
PolitiFact New Jersey, New Jersey’s unemployment benefits fund is broke, with more than $1 billion owed to the federal government, Dec. 11, 2011, accessed April 8, 2013
PolitiFact New Jersey, Chris Christie created a new category that denies unemployment benefits forever, state senator says, Oct. 11, 2012, accessed April 8, 2013
NJBIA.com, NJ Unemployment Trust Fund Almost Broke From Diversions, June 2008, accessed April 8, 2013
E-mail interview with Michael Drewniak, spokesman, Gov. Chris Christie, April 10, 2013
NJ.com, Incoming Christie administration looks to delay, lower employer tax hike, Dec. 8, 2009, accessed April 10, 2013
NJ.com, State question would protect employee funds, Oct. 30, 2010, accessed April 10, 2013
NJ.com, N.J. voters ban use of unemployment, disability funds for budget gaps, Nov. 2, 2010, accessed April 10, 2013
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