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Senate gives tentative OK to unemployment benefit cuts

Posted February 12, 2013

— The state Senate on Tuesday gave key approval to a sweeping rewrite of North Carolina's unemployment system, including deep cuts to the size and duration of weekly jobless benefits.

The Senate voted 36-13 in favor of House Bill 4 on second reading. A final vote is expected Wednesday, after which the bill would go to Gov. Pat McCrory, who has already said he will sign it into law.

The bill cuts the maximum weekly unemployment benefit from $535 to $350 and replaces 26 weeks of state-paid benefits with a sliding cap of 12 to 20 weeks, based on the health of North Carolina's economy. It also slightly raises unemployment insurance taxes on employers.

Analysts said the changes, which would take effect July 1, would help the state repay $2.5 billion to the federal government three years faster than leaving the system unchanged. North Carolina borrowed the money to pay jobless benefits during the recession when state taxes paid by employers couldn't keep up with demand for benefits.

"(The bill) tries to take care of the unemployed, but in addition to that, it doesn't put an excessive burden on the employers," said Sen. Bob Rucho, R-Mecklenburg.

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Senate Republicans easily defeated a series of Democratic amendments, including one by Sen. Martin Nesbitt, D-Buncombe, that would delay the changes until next January to avoid losing federal unemployment benefits for people who have been out of work for longer than six months.

The federal benefits were extended through the end of 2013 as part of the deal Congress passed on New Year's Day to avoid the so-called "fiscal cliff," but changing the state's unemployment program automatically voids that provision of the federal law.

Acting U.S. Secretary of Labor Seth Harris criticized the measure Monday, saying North Carolina would lose an estimated $780 million in benefits over the second half of the year, devastating tens of thousands of families and denting the state's economy.

Sen. Tommy Tucker, R-Union, said he didn't initially like the bill, but as a small business owner, he believes the unemployment changes are needed.

"I almost lost my business (in the recession)," Tucker said, noting he laid off 70 of his 104 employees.

With his business recovering – employment is back to 77 – he said he will pay $110,000 in unemployment taxes this year, and he doesn't want to see that amount grow in the coming years because of the state's unpaid debt.

"I want to get this monkey off business' back as soon as possible," he said.

Nesbitt and Sen. Josh Stein, D-Wake, argued that the state has options to repay the debt by late 2015 or early 2016 without sacrificing the federal benefits, such as issuing taxpayer anticipation notes in three years.

"What we're trading is a little extra in (federal unemployment) taxes, which goes back into our own pocket in 2016 for $780 million in benefits today," Stein said. "That is economic development for 170,000 people in 2013."

As their House counterparts did last week, Senate Democrats criticized what they say as a lack of balance in the bill, saying the unemployed would be shouldering most of the cost of repaying the debt.

"We're hurting our people," said Sen. Ellie Kinnaird, D-Orange. "We helped employers when they asked for help (by cutting tax rates), and now, why aren't we helping employees?"

Other amendments that were defeated would have eliminated the sliding scale for the duration of benefits, would have included exceptions for family hardships and would have called for benefits to revert to current levels once the debt had been repaid.

Sen. Floyd McKissick, D-Durham, even withdrew an amendment that would have set the maximum weekly benefit at $442 – halfway between the current $535 and the proposed $350 – and called on workers to pay a fee to help fund the change.

"I can see the handwriting on the wall," McKissick said.

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  • lostgirl12 Feb 19, 3:47 p.m.

    "good move legislature. $500 a week is $26K a year and that is a lot more than annual minimum wage $18.2K

    sure it's tough.......but that's a great motivator to get any job. wakewiseone"

    I was earning $26k a year and my unemployment benefits are NOT $500 a week, are you kidding??...you need to get a clear understanding of the system before throwint out incorrect facts and figures.

    And guess what? Finding a job that makes enough to support you, equal to what you had before, IS NOT THAT EASY.

    P.S. And thank you, junkmail5, for the clarifications.

  • lostgirl12 Feb 19, 3:41 p.m.

    littleriver69,

    I guess you must be happily employed while some of us who work very hard got laid off due to lack of work and can't find a job. I am college educated, have sent out hundreds of resumes, and NO I cannot live on minimum wage, period.
    So now my unemployment is about to run out just because we are rejecting federal money. Let me know where you live and I'll come hang out with you, sounds like you have no worries.

  • onemorefromtheroad2002 Feb 13, 9:26 p.m.

    do you really think the state undercharged these businesses and besides that if youve ever been and filed for unemployment they calculate how much you have paid in sitting there in front of you as well as sent you a letter in the mail telling you in detail how much you made in the quarter your drawing off of how much you paid in and how much you will get ive done this more than once in the last 25 years so yeah i know exactly what im talking about

  • onemorefromtheroad2002 Feb 13, 9:05 p.m.

    federal extended benefits is a bunch of bull. IF I WORKED FOR 30 YEARS THAT MEANS I PAID IN FOR 30 YEARS. THAT MEANS 26 WEEKS PER YEAR TIMES 30 YEARS IM ELIGIBLE TO RECEIVE. EQUAL TO 780 WEEKS. IT DOES NOT MATTER WHERE IT COMES FROM IF THE STATE SPENT IT THE STATE SHOULD PAY IT BACK. I CANT HELP IT IF ALL Y'ALL PEOPLE LIVE A NICE FANTASY LIFE WITH YOU HIGH SCHOOL SWEETHEART AND HAVE THAT DREAM JOB THAT APPARENTLY Y'ALL LIVE UNTIL YOU ARE OUT LOOKING FOR A JOB AND THINK ITS THAT EASY TO FIND ONE THAT PAYS FOR YOU TO LIVE. GREAT MOTIVATOR TO HELP YOU FIND A JOB BULL. 350 DOLLARS UNEMPLOYMENT A WEEK IS STILL MORE THAN MCDONALDS. UNTIL Y'ALL WORK AND LIVE WHAT LITTLE BIT OF WHAT YOU CALL LIFE WITH YOUR FAMILY ON IT I WOULDNT BE TALKING ABOUT IT. ITS MY MONEY I PAID IT IN FOR WHEN I NEED IT AND NEITHER YOU NOR THE GOVERNMENT HAVE THE RIGHT TO TELL ME I HAVE TO LOWER MY STANDARD OF LIVING AND I HAVE TO GIVE UP WHATS ALREADY MINE.

  • tpmclee Feb 13, 5:59 p.m.

    Junkmail5, thank you for clearing that up for me. It is greatly appreciated.

  • junkmail5 Feb 13, 5:47 p.m.

    A federal loan to the state. The money has to be paid back to the federal government. It wasn't a handout.
    Riddickfield

    totally and completely wrong.

    FEDERAL extended benefits are a FEDERAL program.

    The money comes from the feds.

    The state does not pay it back.

    The state only pays for 26 weeks and that's it.

    Serious, you have no idea what you are talking about.

    The borrowed money is because the # of unemployed shot up during the recession, and the state didn't have the $ for those 26 weeks.

    Because they had been under-taxing businesses for years.

    So instead of now making those businesses pay it back, they're jacking the unemployed for the cash.

    That's what's happening here.

  • Riddickfield Feb 13, 5:38 p.m.

    "the STATE never paid more than 26 weeks.

    All the extended benefits are federal."

    A federal loan to the state. The money has to be paid back to the federal government. It wasn't a handout.

  • junkmail5 Feb 13, 5:19 p.m.

    good move legislature. $500 a week is $26K a year and that is a lot more than annual minimum wage $18.2K

    sure it's tough.......but that's a great motivator to get any job.
    wakewiseone

    You realize folks making min wage weren't getting 500 a week right?

    It was folks making north of $50,000 that got the $500.

    So that's a 50% or greater pay cut.

    You can bet they'd be in a hurry to find another job closer to what they used to make.

  • Rebelyell55 Feb 13, 5:17 p.m.

    sure it's tough.......but that's a great motivator to get any job.

    wakewiseone
    February 13, 2013 5:08 p.m.
    ----------- No offense intended, but I don't think you've read the whole article, or know the whole truth of this.

  • Rebelyell55 Feb 13, 5:15 p.m.

    The reason the STATE is in debt is they undercharged the businesses for years, so the fund to pay those 26 weeks was far too small to deal with an uptick in the number of people unemployed.

    You might wanna learn how what you're talking about works before talking about it.

    junkmail5
    February 13, 2013 4:53 p.m.------------------------ Dead on with this one. They over paid, but then didn't want to collect the money back. The computer system was so screwed up, they under paid some, way over paid others, then they "oh well" we'll have to pay it back. Took two years to get rid of the director, and no one was fired for this. Oh, now they'll pay the money back, in three years! But at what cost our economy and those who'll suffer for it.

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