FOR IMMEDIATE RELEASE Contacts: Amy Auth, 919-301-1737
February 12, 2013 Shelly Carver, 919-301-1744
Raleigh, N.C. – The North Carolina Senate tentatively passed legislation Tuesday to reform the state’s unemployment insurance system with a balanced plan to pay off a massive federal debt that is stalling job creation and economic growth.
The federally mandated repayment plan rests the burden of paying off a $2.5 billion debt squarely on the shoulders of North Carolina employers. If the General Assembly does nothing, the debt will not be paid off until 2019. By that time, North Carolina employers will pay a federal tax of $718.2 million per year rather than the standard $79.8 million per year.
“As long as we remain in debt, the federal government will continue to raise the taxes businesses pay on every employee, threatening existing jobs and making it harder to create and recruit new jobs,” said Senate Finance Chairman Bob Rucho (R-Mecklenburg.) “The irony is that a program intended to help folks get back to work is beginning to stand in their way. House Bill 4 will start to reverse this trend and create a sustainable unemployment system to protect those who lose their jobs in the future.”
House Bill 4:
· Requires employers to contribute significantly more money to fund unemployment benefits.
· Adjusts benefits to workers who lose their jobs starting July 1 to bring them more in line with other Southeastern states. Currently, North Carolina has the highest weekly benefit amount and offers them for the longest period of time among our neighbors.
· Grandfathers in people who are currently receiving unemployment benefits.
· Rebuilds a $1 billion surplus in the unemployment insurance fund to prepare for the next economic downturn.
· Results in a complete payoff of the federal debt by 2016 and corresponding drop in federal unemployment insurance taxes paid by North Carolina employers from $718.2 million per year to $79.8 million per year.
As a result of the North Carolina Congressional delegation’s failure to grandfather in the state’s unemployment reforms into their federal fiscal cliff negotiations, an extension of federal unemployment benefits for those who have been out of work longer than 26 weeks will not be possible. Doing so would hamstring North Carolina job creators with further federal tax increases and prolonged debt.
During good economic times, previous Democratic legislatures and administrations made irresponsible decisions that hurt the solvency of our state’s unemployment insurance system. When the recession hit, North Carolina was completely unprepared to pay the flood of new unemployment claims and was forced to borrow more than $2 billion from the federal government.