@NCCapitol

Companies to pay more to cover NC's bailout

Posted October 27, 2011
Updated October 28, 2011

— The unemployment tax for North Carolina businesses will increase by $21 per worker in January to help the state repay the federal government the $2.5 billion it borrowed to cover jobless benefits during the recession.

North Carolina has the nation's sixth-largest debt for extended unemployment benefits, and the unemployment taxes will continue going up by $21 per worker each year until the debt is paid off.

Lew Ebert, chief executive of the North Carolina Chamber, said Friday that he hopes state officials can find a different way to repay the government.

"The (state) unemployment rate is at an all-time high," Ebert said. "Certainly, I think anything that increases the cost of doing business is problematic."

Some states, such as Texas, have handed taxpayers the bill, issuing bonds to pay off their debt. Others, including Indiana, have overhauled their entire unemployment system, raising taxes and cutting benefits.

"I think every option is on the table. Different people have proposed different options," said North Carolina Department of Commerce spokesman Tim Crowley.

Last week, the department requested bids for someone to examine the state's unemployment insurance tax structure and how best to repay the debt. State lawmakers asked for such a study seven months ago, although they didn't provide funding for it or set a deadline for its completion.

Money Bill coming due for NC's unemployment benefits debt

Commerce Secretary Keith Crisco, who told lawmakers Thursday about the bid request, suggested two weeks ago to state Sen. Bob Rucho, R-Mecklenburg, that three reports from investment firms would suffice for the study. Those studies, which are already complete, suggest the state borrow money from a private source to repay the federal government, since private interest is likely to be lower.

Rucho said those reports wouldn't cut it and criticized Democratic Gov. Beverly Perdue's administration for failing to expedite an outside study.

Crisco's department has been working for months to prepare for a scheduled Nov. 1 transfer of the Employment Security Commission, which manages the state's unemployment benefit programs, to direct control under his agency. Rucho argues there are inherent problems with the agency that are contributing to the size of the debt.

"We wanted this study done so that come November we could begin implementation," Rucho told Crisco. Now, he added, "we don't even get a chance to have a road map to repair the damage that is happening every day."

Crisco said the study recommendations could be available in February.

"We're here. Let's move forward," Crisco responded to Rucho. "Let's make it happen."

Some observers are still hoping Congress will decide to forgive the debt for all the states that needed unemployment bailouts, but the push for deficit reduction make that unlikely.

Ebert said any solution will likely find business owners paying more in unemployment taxes, but he said he hopes the study doesn't stop there.

"We're hoping they'll take a comprehensive look at not only the debt we owe, but how are we paying out benefits and, ultimately, how do we have a system we can afford," he said.

16 Comments

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  • jimthorne73 Oct 31, 4:28 p.m.

    unemployment is welfare

  • storchheim Oct 31, 1:01 p.m.

    fayncmike, this article is about unemployment, not welfare. But as long as you want to throw in bitter comments about how cruel life is for "TheNeedy":

    If you want to contribute directly to agencies and foodbanks that serve TheNeedy, no one's stopping you. Otherwise, it's getting mighty old.

    What part of "cannot keep spending money they do not have" did you not comprehend?

    The economy's been in the pits for 3 years now. One would think there would be no children under 4 years old born to TheNeedy, but that's not the case, is it? No, they want a baby, they by g*d have as many as they want! And then cry about being "single moms" who can't support a "family" (brood of kids) on minimum wage, so the employers should be forced to pay her a "living wage" - not that she should practice birth control.

    What will it take for us to agree that sometimes, it IS wasted money? What will it take for you to entertain the notion that TheNeedy must help themselves too?

  • storchheim Oct 31, 11:30 a.m.

    At least for a change the taxpayers won't be on the hook for this. It isn't the taxpayers firing people, why should we have to pay for businesses that couldn't plan and/or hire properly?

    I was hired into a position for which I was barely qualified, given nothing but hostility instead of training, let go at the end of 90 days probation, saw the job advertised a week or so later, and then again about 100 days after that. The person before me had also been too overwhelmed, and let go end of probation. So this company can't get its act together and do a proper job of choosing candidates, but hey, all they have to do is pick another resume. They're not damaged, the string of unemployed people they leave in their dust is. I'm now in my 5th month of unemployment, looking every day for a job, and updating my skills...won't have any experience though, so wish me luck.

    They're playing with our livelihoods. Let them pay.

  • storchheim Oct 31, 11:22 a.m.

    I've brought a coverup to the attention of WRAL, News & Observe, and last week to my state Representative. So far have not heard back from anyone, and I've got it in writing!! And the people involved still have their jobs, fat salaries, and generous pensions.

    I feel there's no point in bringing it to the top execs at ESC. They'll protect their own.

    All those involved are black. Think that has anything to do with why they haven't been fired?

  • visionofsamsara Oct 31, 11:13 a.m.

    if the companies are going to have to pay for them anyway, they mightas well hire them. on the other hand if they weren't paying for them already they might be able to hire.

  • fayncmike Oct 31, 8:34 a.m.

    "
    I agree this is a state issue, but it does involve Obama and the liberal mentality of spend money and give money and we will worry about how to pay for it someother time and hopefully when it is a republican in office. The states and the federal gov't cannot keep spending money they do not have to keep entitlements going to the people that do not put into the pot. didisaythat"

    Yes, we shouldn't waste money on the needy. If they have no bread, than let them eat cake.

  • T5050 Oct 28, 7:40 p.m.

    "Everyone wants the rich to pay more. They are paying the majority of taxes." didisaythat

    What news have you been watching/reading??? The problem is the rich are NOT paying near their fair share. Due to tax write offs and incentives available to the rich they are able to shelter the majority of their money thereby avoiding taxes. Maybe if they did pay a fair share us middle class could get a little ahead.

  • didisaythat Oct 28, 7:21 p.m.

    Rebelyell,

    I agree this is a state issue, but it does involve Obama and the liberal mentality of spend money and give money and we will worry about how to pay for it someother time and hopefully when it is a republican in office. The states and the federal gov't cannot keep spending money they do not have to keep entitlements going to the people that do not put into the pot. It will never work when we have the numbers of have nots that we have today. We also have that number because we are making this country an welfare country. Our system does not work well as a welfare or socialist state. Everyone wants the rich to pay more. They are paying the majority of taxes. If that is not enough for the ones that don't pay then they need to get a job and put into the pot.

  • Rebelyell55 Oct 28, 7:19 p.m.

    Wonder when the next raise is coming for the other milion dollar mistake, this only address the 1st one.

  • Rebelyell55 Oct 28, 7:18 p.m.

    ...Sometimes i wonder how the "smart" politicians think
    Ladyblue- the Phoenix.....
    That was a joke right? Smart? lol, ya got the best posting of all to day...

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