RALEIGH (AP) — A Republican-authored solution to more quickly pay off the $2.5 billion North Carolina owes the federal government for covering unemployment benefits cleared another legislative hurdle Tuesday.
A legislative study committee recommended to the full General Assembly a proposal that would scale back the amount and length of benefits for future unemployed workers and require some higher unemployment tax rates for businesses.
The bill will be introduced when the Legislature begins work in earnest at the end of the month. The House and Senate still would have to pass a measure and present it to new Gov. Pat McCrory, who has called eliminating the debt an early priority.
“All of this will be debated further,” Sen. Bob Rucho, R-Mecklenburg, one of the proposal’s chief negotiators, told members of the Revenue Laws Study Committee
The plan largely kept intact a pitch presented by GOP finance leaders to the panel in December. It would erase the debt by 2015, or three years earlier than if no changes were made to the method the state is using to pay it down. The proposal is also expected to replenish the state’s unemployment trust fund that went into the red during the Great Recession, creating a $2.3 billion reserve in 2021, according to a memo by legislative researchers analyzing the plan.
The maximum weekly benefit for workers would fall from the current $525 to $350, while the maximum number of weeks a jobless claimant could receive state benefits would drop from 26 weeks to 20 weeks in periods of the highest unemployment. The benefit period could actually range from five to 12 weeks in periods of very low unemployment.
North Carolina businesses would continue to see their federal unemployment insurance taxes go up by $21 per employee with every year the debt hasn’t been paid off. The companies also would continue to pay a state unemployment tax surcharge and see minimum and maximum contribution rates go up slightly — eliminating the zero rate top-rated companies now receive.
Critics say the overhaul is one-sided upon displaced workers. The plan would cut the overall amount of state benefits disbursed to them by half, while the average weekly benefit amount would fall at least 10 percent below the current average of $296, according to a study by the National Employment Law Project.
Unemployment benefits get plowed back into local economies to pay for rent, food and other living needs, project senior staff attorney George Wentworth said at a news conference.
Committee member Sen. Floyd McKissick, D-Durham, urged colleagues to look for other options that don’t place such a hardship upon displaced workers.
“We need to have some compassion and respect for the fact that people are at probably the most difficult and challenging points in their lives and they’re depending on unemployment compensation,” McKissick told the committee.
Backers of the proposal say both business and workers share in the burden of fixing the problems with the trust fund, which some say are two decades in the making. Republicans on the committee pointed out the plan would apply to unemployment claims filed after July 1 and argued few people currently receive the maximum weekly benefit.
Rucho and others have said benefit changes bring North Carolina’s levels more in line with surrounding states.