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Legislators can rescue $780 million for N.C.

We can think of 780 million reasons the legislature should slightly delay changes to North Carolina’s unemployment insurance program. Nina Davis can think of one: She doesn’t want to get evicted.

“I’m not going to be able to afford where I stay,” Davis told the Observer editorial board Monday. “Some of the things I’m used to getting on my own, I won’t be able to.”

Davis made $8 an hour as a lead cook at Charlotte Bobcats games. But her hours were cut back, then the season ended and now she hasn’t found work as a nursing assistant. State unemployment benefits have kept her afloat, but run out next month. She hopes she can keep the lights on by scrimping on toilet paper and laundry detergent.

Davis would normally be eligible for extended benefits from the federal government when her state-funded checks run out. That would help cover the bills until she finds work. Now that won’t happen, unless the legislature changes course.

The federal government was poised to send $780 million to unemployed North Carolinians from July 1 to Dec. 31. Under federal law it will now send none, because the legislature cut state benefits. If the legislature delays those cuts just six months – doesn’t repeal them but just delays them – the feds will agree to send that $780 million to North Carolina.

That’s money that people barely scraping by can surely use. And it’s money that immediately would be pumped into North Carolina’s economy. Those benefits don’t get socked away in a piggy bank or mutual fund; they are spent immediately on rent and groceries and other basic needs.

To be sure, North Carolina’s unemployment insurance program is broken – and broke. The state owes the federal government more than $2 billion it borrowed to cover claims during the economic downturn. In response, the legislature in February overhauled the system, cutting benefits and changing some taxes on employers. That will help the state pay its debt back more quickly, which in turn will prevent further federal tax hikes on N.C. companies. Thus, the state’s rush.

Set aside that the legislature’s fix was unbalanced. It put about two-thirds of the burden on unemployed people and about a third on employers, even though it was employer tax cuts during the good times that largely caused the mess. And the benefit cuts are permanent; new taxes on employers end within three years.

That boat has sailed. The least the legislature can do, then, is make those changes effective Jan. 1 instead of July 1. That delay of just six months would do little to slow the debt repayment while clearing the way for a giant infusion of federal money. At least 70,000 people – and up to 170,000 – would be eligible for the money.

North Carolina is apparently the only state giving up the federal cash. It doesn’t have to be. Fixing the system and getting more than three-quarters of a billion federal dollars? Now that’s a win-win.

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