Debt-cutting measure could mean fewer unemployment benefits
Posted December 5, 2012
Future unemployment recipients in North Carolina could receive fewer benefits under plans a legislative committee will review today.
North Carolina owes the federal government $2.4 billion the state has borrowed to pay first time unemployment claims. Under federal law, the North Carolina taxes companies pay toward funding the unemployment insurance system will rise in order to help repay that debt. Lawmakers fear those tax increases could be a drag on the state's economic recovery.
The Revenue Laws Study Committee, a group of House and Senate lawmakers, is expected to roll out a plan to repay that debt more quickly today (Wednesday). As the Associated Press reported last month, that proposal is expected to reduce the benefits workers receive when they lose their jobs.
According to a draft agenda, the committee will hear about plans to refinance the unemployment debt. Refinancing the debt could help pay it down faster, but it's unclear if the state has enough "capacity" to borrow the needed money.
Liberal activists worry that the deal, crafted by conservative lawmakers, will help avoid higher taxes for businesses at the expense of the unemployed. (See copy of release below).
“The changes to the unemployment insurance system being pursued by Revenue Laws Committee members will significantly reduce benefit amounts and the duration of benefits while doing nothing to address the long-term financial footing of the unemployment insurance system,” said Bill Rowe, director of advocacy at the North Carolina Justice Center.
But business leaders, including the North Carolina Chamber of Commerce, have pushed lawmakers to address this problem.
"The additional tax burden with a status quo repayment approach could represent an unsustainable increase in total unemployment insurance taxes for businesses, threatening what is needed most, jobs for North Carolinians," said Gary Salamido, vice president of government affairs for the North Carolina Chamber, in testimony to the committe earlier this year.
The committee meets at 9:30 a.m. If it does reccomend legislation, it will have to be heard and passed when the full General Assembly returns in January. Rep. Julia Howard, R-Davie, told WRAL-TV Tuesday that she expected lawmakers to take up a bill that is basically the same as what the committee will approve today.
Governor-elect Pat McCrory, a Republican, has said that addressing the unemployment debt one of his top priorities and something he'd like to do early in his term.