GREENSBORO (AP) ó The state of North Carolina could run out of money to pay unemployment benefits next year as layoffs increase, but officials say they plan to borrow if necessary to keep the money flowing rather than raise business taxes.
State officials said they will borrow from a federal backup fund to pay jobless claims if the state benefit fund runs dry, The News & Record of Greensboro reported Wednesday.
Borrowing the money will prevent businesses from having to pay higher taxes for unemployment insurance and a similar plan worked in 2002, said Andy James, spokesman for the Employment Security Commission of North Carolina.
ěIf our fund goes to zero, we do have a plan that has been tried-and-true and proven,î James said. ěIím hoping we donít get there, but if we do it will still be several months down the road.î
North Carolinaís unemployment rate is at 7 percent and monthly unemployment payments are between $115 million and $130 million a month. The state currently has $282 million in reserve for jobless benefits, but expects to collect between $500 million and $700 million in the first half of 2009.
If the economy worsens and unemployment payments rise to $150 million a month, the reserve would be wiped out by the middle of 2009, James said.
If North Carolina borrows to keep benefits moving, the state can avoid interest by repaying the money by Sept. 30, James said. If the money canít be repaid, the state would issue ětax anticipation notesî at lower rates, James said.
In the meantime, state unemployment offices are trying to speed the application process and handle everything in one visit so people donít have to return.
Ben Barnwell, manager of the office in Greensboro, said the legislature appropriated money to allow hiring of more employees. The stateís toll-free application line also could keep people from having to stand in line, he said.