A plan to repay North Carolina's unemployment debt could mean fewer benefits for laid off workers. STATUS: This bill was signed into law on Tuesday, Feb. 19.


North Carolina owes the federal government $2.5 billion, which the state borrowed during the height of the recession in order to pay unemployment claims. That debt has triggered a rise in the taxes employers pay for each employees.

Legislative leaders have drafted a bill that would combine hikes to the FUTA tax with a reduction in benefits for newly unemployed workers. There is some question whether that plan will work given recent changes to federal law made as part of the so-called "fiscal cliff" deal. Changes to state unemployment benefits could cause the federal government to stop payments to workers who have been unemployed longer than 26 weeks. 

House leaders say they wish to proceed with reform efforts despite its potential impact on the long-term unemployed.

Bills and status:

Bills have been filed in both the House and the Senate to remake the state's unemployment system. The House Finance Committee passed the bill on Thursday, Jan. 31. Republicans backers say the bill expedites repayment of more than $2.5 billion to the federal government while making the system more nimble. Democrats objected, saying the measure takes too many benefits away from unemployed workers and asks too little of businesses. The measure is scheduled to be on the House Floor Monday, Feb. 4. Gov. Pat McCrory has said he will sign such a measure if it comes to his desk. 

The House approved the bill remaking the state's unemployment system on Feb. 5. The Senate gave final legislative approval to the bill on Feb. 13. It is now waiting for Gov. Pat McCrory's signature or veto. 

UPDATE: Gov. Pat McCrory signed this bill into law on Tuesday, Jan. 19. 

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