Raleigh, N.C. — Gov. Pat McCrory says he'll decide next week whether to support a push to make changes to the state's unemployment system in July, even if it means cutting off federal aid to the state's long-term jobless.
After unemployed workers have used up their state benefits – currently 26 weeks – they're eligible for extended benefits paid for by the federal government. As of December, around 85,000 people in North Carolina – about half of all unemployed workers – were receiving federal extended benefits.
Those checks were set to run out at the end of 2012. But in the "fiscal cliff" deal, Congress extended federal jobless benefits through the end of 2013.
However, there's a catch: If North Carolina (or any state) cuts its own unemployment benefits during 2013, federal extended benefits will be cut off.
Lawmakers could avoid the problem by changing the effective date of any unemployment reform bill from July 1, 2013, to Jan. 1, 2014. Some said they were considering that option.
The goal of the reform is to repay a massive debt owed by state businesses to the federal government. When the state's unemployment fund ran out of money during the recession, the federal government automatically loaned the state the money to cover claims.
Business leaders and other reform backers say the sooner the reform bill is passed, the sooner they can start paying down the debt. They say a six-month delay would cost hundreds of millions of dollars in interest.
On Thursday, House Finance Committee Chairwoman Julia Howard said the measure would move forward with an effective date of July 1.
At a Friday event in Durham, McCrory said he hasn't yet decided whether he agrees.
"We are reviewing those two options – whether to end [federal extended benefits] in July or have it continue through January," he said.
"The biggest issue that I'm reviewing right now is we have to pay off the debt of over $2.8 billion," McCrory said. "By extending it, there's no plan on how to repay that additional debt of several hundred million dollars that would be incorporated into our debt model.
"As I said before, when I became governor, I don't plan to live off a credit card. We plan to pay off our credit cards. And that will be the evaluation," he added. "I'll probably be making that decision within the next five to six days."