NC House debates unemployment insurance bill

Feb. 05, 2013 @ 09:43 AM

The North Carolina House passed the second reading of a measure aimed at cutting the state's $2.5 billion debt to the federal government.

Debate lasted late into Monday night and was passed 78-40. A third reading of the bill will take place today.

The bill cuts the maximum weekly unemployment benefit to $350 and requires higher state and federal taxes.

"We're talking about cutting, by at least a third, the benefits for the unemployed of North Carolina," said state Rep. Susan Fisher, D-Buncombe. "These are people that are trying to pay medical bills, college educations for their children and their groceries."

State Rep. Mike Hager, R-Rutherford, the Republican Whip, said that the issue stems from a time when the General Assembly elected to give money in an unemployment benefits fund back to businesses. However, the reduction in the state's fund corresponded at the same time the recession hit, leaving a $2.5 billion shortfall.

From that point, the federal government loaned the state the shortfall and now, the state has to pay it back with interest calculated at $150 million per year.

"If we don't start making payments to that fund, every employer will have a $40 addition to their unemployment taxes," Hager said. "That adder will stay on until the debt is pay off."

The decision to give money from the fund back to businesses came at a time when Democrats controlled the General Assembly. Fisher said that Democrats have to take responsibility for that, but times have changed. That also means that this is not the time to cut unemployment benefits, she said.

"We are not in the same place that we were," Fisher said. "The unemployment rate wasn't 9 percent and one of the highest in the country."

By not cutting the unemployment insurance rate, Hager said that small businesses will be forced to trim their workforce and new employers may be encouraged to look elsewhere because of the fact they will have to contribute in paying down the debt.

"It is simple ... more revenue, less benefits ... that will help build the pool," Hager said.

But, Fisher contents that this is not an issue that should be forced on those that are unemployed and already struggling to make ends meet. In addition, she said that the state will lose $65 million per week to its economy, if the cut holds.

"The message has been to find more jobs but, the Republicans have decided to strip the unemployed of their benefits," Fisher said. "I think it's wrong."

The bill also cuts the term for unemployment benefits to 13-20 weeks. Currently, unemployment benefits can go out to 26 weeks.

Hager said that, if passed by the Senate and signed by Gov. Pat McCrory, the new measures will only effect those filing for new unemployment benefits on July 1, 2013.

The House fast-tracked the bill. It was filed on Jan. 30 and moved through committee and onto the floor of the House in six days.

"We know this needs to move and it doesn't need to languish around," Hager said. "We're not going to kick the can down the road."

Cyrstal Feldman, press secretary for Gov. McCrory, said that the governor was supportive of legislation to reform unemployment insurance.

"We need to pay off our credit card debt as soon as possible to create financial certainty for our small businesses and job creators," Feldman said. "The goal for this new policy is to get the people back to work and reverse old strategies which resulted in unemployment above 9 percent in North Carolina over four years."