Raleigh, N.C. — North Carolina could rejoin the ranks of states that offer long-term unemployment benefits under legislative language pushed by U.S. Sen. Kay Hagan.
Hagan, a Democrat facing re-election in 2014, recently wrote to top Senate leaders asking that they change federal law to allow the U.S. Labor Department to renegotiate its long-term unemployment agreement with the state. Changes to state law triggered an end to long-term benefits for North Carolina workers effective July 1.
"This has been devastating for the individuals and families who are already struggling to make ends meet in tough economic times," Hagan wrote earlier this month to Senate Majority Leader Harry Reid and Sen. Max Baucus, the chairman of the Senate Finance Committee.
Hagan's language was included in a bill that faced a procedural hurdle on Tuesday night. Broadly, that measure would continue federal funding for long-term unemployment benefits for all states.
The federal bill was delayed by a procedural objection offered by North Dakota Republican Sen. John Hoeven.
"There are a number of concerns that member on our side of the aisle have with the legislation, most notably the price tag," Hoeven said on the Senate floor.
The one-year extension would cost $25 billion, according to the nonpartisan Congressional Budget Office. Republicans, he said, want to find savings in other programs to pay for the extension.
Although passing an extension of long-term unemployment benefits is a key priority for Democrats who control the Senate, it's unclear whether the measure will pass Congress before the end of the year.
Unemployment benefits subject of a year-long clash
Tuesday's development in Washington, D.C., has its roots in a state bill that began taking shape more than a year ago.
For much of 2012, Republican state legislative leaders expressed concerns about North Carolina's mounting debt to the federal government. The state borrowed $2.5 billion to pay jobless claims during the recession after its own unemployment trust fund, which is fueled with taxes levied on businesses, was exhausted.
When the trust fund is depleted and the state owes the federal government debt for unemployment funding, federal law requires automatic per-work tax increases. To mitigate those tax increases, Republican leaders pushed through a bill early in 2013 that reduced the maximum amount of state benefits and the amount of time for which workers could receive those state-funded benefits.
A budget deal in Congress extended federal long-term unemployment benefits through 2013, as long as states made no changes to their unemployment programs. When North Carolina made its adjustments on July 1, all extended benefits to more than 60,000 North Carolinians who had exhausted all of their state benefits ended immediately. Thousands more have been affected in the time since.
The issue quickly became a centerpiece in some of North Carolina's most high-profile political fights. The so-called "Moral Monday" protests, which have been led by a coalition of liberal groups, including the NAACP, and have featured hundreds of arrests at the Legislative Building, named changes to unemployment benefits as a key issue.
Republicans, for their part, blasted Hagan at the time for not getting North Carolina "grandfathered" under federal law so that the state could have made changes to its unemployment program without losing long-term benefits.
"That failure is actually going to end up costing businesses in North Carolina about $200 million – and maybe as much as $400 million," Sen. Phil Berger, R-Rockingham, told reporters earlier this year.
Berger's criticism was all the more pointed as Republicans geared up their campaign to unseat Hagan in the 2014 election. Hagan responded that she couldn't have pushed for amendments to federal law because, at the time, there was no state proposal to grandfather.
In her letter to U.S. Senate leaders earlier this month, Hagan blasted the state legislature's actions as "irresponsible." She wrote, "I want to do everything possible to remedy the severely damaging impact of the state law."
It's unclear whether the bill extending long-term unemployment benefits will pass the Senate, much less the entire Congress before the end of the year.