@NCCapitol

Bill for jobless benefits is hidden deficit for NC

Posted February 22, 2011

— The state owes the federal government almost $2.6 billion for jobless benefits paid over the past two years to unemployed North Carolina residents, and lawmakers aren't sure how they will pay the bill.

The state Employment Security Commission had to borrow money from the U.S. Labor Department on several occasions to keep benefits checks flowing during the worst recession in decades, and the bill is now larger than the projected 2011-12 budget deficit.

"I'm very concerned about it," Senate President Pro Tempore Phil Berger said Tuesday. "We have a real problem in the Employment Security Commission."

Employment Security Commission office Tax increase might be needed to pay off ESC debt

About 30 states borrowed money to cover their unemployment benefits, but North Carolina's bill is among the largest. The state must repay millions of dollars in interest on the loans by Sept. 30.

The pro-business, Republican-led General Assembly might actually have to raise unemployment insurance rates on employers to pay the bill.

"That comes directly off of our bottom line," said Jennifer Dunleavy, who owns Accuro Group, a professional staffing company. "If we're looking at the prospect of increasing those costs even more, certainly that really eats into our ability to grow as a company. That cuts into our ability to hire."

Berger said he wants to do everything possible to keep rates low while returning the state's Unemployment Insurance Trust Fund to the black.

Sen. Debbie Clary, R-Cleveland, co-sponsors Senate Bill 99, which calls for hiring an outside consultant to recommend changes to the ESC's policies and the unemployment insurance tax structure.

"I think it's time to look for outside help," Clary said.

Businesses might pay more and the jobless receive less to help the state deal with the growing debt, she said. The bill, which was filed Tuesday, notes that the state paid out $1.9 billion in jobless benefits in 2010 while taking in only $955 million in unemployment taxes.

"It's the monster in the room standing off to the side threatening you," Clary said of the outstanding loans. "We know it's there. It's looming, and it has to be fixed."

Lawmakers said they hope the federal government extends the loan and puts off payment until the economy improves and employers are better able to pay higher unemployment insurance rates.

Employers like Dunleavy argue, however, that a burden on them weighs on everyone.

"That money has to come from somewhere. So, they will either increase their prices or they will have to eat into their own profitability," she said. "They'll have to make up that money somewhere."

53 Comments

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  • Bendal1 Feb 24, 1:34 p.m.

    lovethesouth,

    Over the last two decades, 99% of the US work force's wages have been stagnant when you account for inflation. That top 1%? Their wages have QUADRUPLED over the same time period.

    If that's not "the rich get richer" then I don't know what is. How did they do that? Well, if you've got a company, and layoff people and tell the others "work harder or you get fired too", you just increased your profits without doing anything but signing some pink slips.

  • lovethesouth1 Feb 23, 4:36 p.m.

    Oh really steelers seven? How are the rich getting richer with all the pay freezes? Maybe the rich are getting richer because they work harder. Almost every "rich" person I know puts in a lot more than 40 hours a week managing an entire company or group of people. I don't deserve an executive salary, but an executive does. And he pays a hell of a lot more taxes than we do too. Get your mind right. People that work hard deserve to reap the benefits without being held liable for an incompetent goverment that can't harness their spending habits.

  • Vietnam Vet Feb 23, 4:32 p.m.

    "I think it's time to look for outside help," Clary said.
    Outside help? Oh yeah, let's borrow even MORE money for more deficit!!

  • Jim Britt Feb 23, 2:03 p.m.

    "Republican-led General Assembly might actually have to raise unemployment insurance rates on employers to pay the bill."

    When pigs fly. They'll shift any tax increase to the employed. That's standard GOP operating procedure. If they hadn't been giving businesses a tax break from the start the trust fund wouldn't have been underfunded.

  • Bring on the 4 Dollar Gas Feb 23, 1:44 p.m.

    "why is this not included in the State's budget that Bev just proposed?"

    because her budget doesn't include "smoke & mirrors" so the next best thing is exclusion of the facts.

  • redspringssean Feb 23, 12:56 p.m.

    SteelersSevenisHeaven why do you blame the Republicans when the Democrats have been in the majority the whole time spending like there is no tomorrow? The real reason Bev cares about cuts to that so-called job creation fund is because her son works for the law firm that manages most of the money. As always there's one set of rules for the politicians and another for everybody else. Besides, why would anyone who is rich or super rich want to pay even more taxes than they already do to support government entitlements to the poor. It seems to me that it's not really a winning proposition for anyone to increase the rolls of the poor.

  • redspringssean Feb 23, 12:44 p.m.

    Some questions I have about this hidden deficit. First of all, why is this not included in the State's budget that Bev just proposed? If the State Constitution requires a balanced budget every year and it sounds as though this deficit has been generated over the last 2 years then why are we just now hearing of this? Also, where did all the money go from the years when the unemployment rate wasn't 10+% as it is now? None of this make a bit of sense!

  • YourConscience Feb 23, 12:20 p.m.

    tgentry, Did it ever occur to you that maybe it was a once in a lifetime, entire world economy collapse that caused a $2.6 billion dollar deficit. Republicans are known for budget busting before and after the Clinton era. I'm not Democrat, but independent.
    I really don't know why the Republicans are complaining so much...Every report I've seen reveals that the rich are getting richer, the super rich are getting super richer, and the poor are getting seriously poorer...Just the way Republicans want it. So stop complaining.

  • 1 awesome Dad Feb 23, 11:57 a.m.

    Please someone explain to me why everyone looks so harshly at individuals on unemployment. We were laid off and we worked and for decades never having to depend on unemployment to get us through. All of a sudden the economy goes south and millions of folks are canned and we are accused of mooching off the gov't, not working, not applying for any kind of job.

    It sickens me to hear how we the unemployed are referred to and treated and would by all means enjoy a bigger paycheck than the 300 bucks that unemployment deals out. Yes I have applied for every entry level job imaginable and yes I am getting ready to go off of unemployment so you all will be happy to hear that but hopefully welfare wont be to bad until I can get back to work. If Bev doesnt keep making it harder to do.

  • dws Feb 23, 11:53 a.m.

    hp277, I understand what UI is, and yes, it is a $2B+ gravy train......I know of people who drew severance and received unemployment payments at the same time by simply taking a MS Office course in an application they had been previously using for years

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