Raleigh, N.C. — State lawmakers might have to delay the effective date or make other changes to a planned overhaul of North Carolina's unemployment program due to restrictions handed down as part of a recently passed federal law, Republican leaders said Wednesday.
A legislative committee last week forwarded a bill to the General Assembly that would slash the maximum weekly unemployment benefit from $535 to $350. Under the proposal, the state also would replace its 26 weeks of benefits with a sliding cap of 12 to 20 weeks, based on the health of North Carolina's economy, and would raise unemployment insurance taxes slightly on employers.
Analysts said the changes 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.
Republican legislative leaders planned for the overhaul to take effect this summer, but a spokesman for House Speaker Thom Tillis said the effective date could be delayed until January 2014 because of provisions in the American Taxpayer Relief Act, which Congress passed on New Year's Day to avoid the so-called "fiscal cliff." The spokesman later clarified that a delay was only one of many options being considered by lawmakers in response to restrictions contained in the fiscal cliff bill.
The federal law offers an extension of federal unemployment benefits, but only for states that don't make changes to their state benefit systems. Reforms right now would cost jobless North Carolinians as much as $350 million in federal benefits.
Senate President Pro Tem Phil Berger blasted Democratic U.S. Sen. Kay Hagan for not seeking an exemption for North Carolina's unemployment program.
"That failure is actually going to end up costing businesses in North Carolina about $200 million – and maybe as much as $400 million," he said.
Federal unemployment insurance taxes will continue to rise on North Carolina businesses to help repay the debt.
Senate Finance Committee Co-Chairman Bob Rucho said the lost money isn't guaranteed, but rather a potential loss. He also said that the General Assembly could still enact the changes in July.
"We've got to figure out the best way to put a solvent (unemployment) system in place," said Rucho, R-Mecklenburg.
"This just smacks of partisan gamesmanship, and North Carolina's unemployed workers shouldn't be used as a political pawn," Hagan spokeswoman Sadie Weiner said in a statement. "Sen. Hagan is focused every single day on working with industry and small businesses to create jobs in North Carolina so that we can reduce the number of unemployed people in our state."
Although lawmakers also asked other members of North Carolina's congressional delegation to support an exemption, Berger, R-Rockingham, said he singled out Hagan for criticism since the unemployment changes in the fiscal cliff bill originated in the U.S. Senate, which is controlled by Democrats.