The N.C. Chamber wants the state to rein in future unemployment benefits and issue bonds to pay off the $2.4 billion in debt the state owes the federal government – money that it borrowed to pay benefits to jobless workers.
Both measures would require action by the legislature, which reconvenes Wednesday. The Chamber is the lead advocate for the state’s business interests and wields considerable clout.
The current system is a “jobs killer” because of the higher unemployment taxes that the state’s employers must pay, said Chamber lobbyist Gary Salamido.
The bonds the Chamber is proposing would be paid off by unemployment taxes collected from the state’s employers. But the employers could save more than $200 million in taxes because of lower interest rates and by eliminating the extra tax they pay as long as the state is in debt to the federal government, Salamido said.
The Chamber also is advocating that the state scale back unemployment benefits so that it doesn’t rack up new debt moving forward. The cutbacks it is pushing – reducing maximum weekly benefits from $506 to $350 and reducing the maximum length of unemployment benefits paid by the state from 26 weeks to 20 weeks – would be prospective and wouldn’t affect what currently unemployed workers receive.
Today, any benefits that unemployed workers receive beyond 26 weeks are funded by the federal government. Extended federal benefits are set to expire at the end of this year, although Congress could act to extend them.
One advocacy group official believes the Chamber’s agenda would unfairly punish vulnerable unemployed workers in order to fix a problem that stems from a series of cuts in the unemployment taxes paid by employers. Those cuts were implemented by the state in the 1990s.
“The basic rule is, when employees didn’t get the benefit of the tax cuts, they shouldn’t be the ones who pay for it,” said Harry Payne, senior counsel at the nonprofit N.C. Justice Center. Payne is a former chairman of what is now the state Division of Employment Security, which handles unemployment claims in North Carolina.
Payne said cutting the weeks of benefits from 26 to 20 would be “especially onerous” because it would hurt those who need help the most. He suggested the Chamber may be overreaching as a political ploy designed to win the best legislation possible for its members.
