TRENTON - The state Senate acted yesterday to avoid a tax increase on employers, at least for now, by pumping $260 million into the fund that pays benefits to out-of-work New Jerseyans.

Democratic and Republican legislators and governors diverted $4.7 billion from the fund over the last 14 years to help hospitals pay for treating the uninsured. As a result, the fund is near to falling below a level that would trigger an automatic $350 million increase in employer payroll taxes on July 1.

The money was diverted before Gov. Corzine took office in January 2006, and Corzine proposed putting in the $260 million surplus to avoid a tax increase.

The Assembly hasn't considered the bill approved, 38-0, by the Senate, but Senate Budget Chairwoman Barbara Buono (D., Middlesex) said the move is "the right fix for these tough times."

The fund has currently $977.3 million.

Legislative staff estimate the cash infusion proposed by Corzine would put the balance at $1.05 billion by March 31, again leaving it close to the threshold for the tax increase. So depending on factors such as economic conditions and new unemployment filings, an employer tax increase could be triggered starting July 1, 2009.

The Senate also approved, 39-0, a measure to cut unemployment taxes by as much as 50 percent if the fund reaches a certain level. That level would be $3.7 billion, so legislative staff said a reduction would be unlikely at least through 2011.