Anthony GonzalezStaff Writer
November 27, 2012
North Carolina owes a huge sum of money to the feds.
The state is one of 19 that still haven’t repaid the federal government when they began borrowing money to pay for a flood of unemployment applicants during the beginning of the national recession.
Today, North Carolina’s tab is currently the third-highest in the country, behind only California and New York.
According to the North Carolina Department of Commerce Division of Workforce Solutions, the state’s unemployment rate remains at 9.3 percent.
“As of today, Surry County is at 9.3 percent, with neighboring Yadkin County at 8.1 percent and Wilkes County at 10.1 percent,” said Tony Mizzi, office manager for the department.
To pay down on the $2.4 billion debt owed to the federal government for jobless benefits, legislators and business leaders say a roadmap is needed.
One proposal gaining traction is now set to be considered on December 5th in Raleigh at the General Assembly’s Revenue Laws Committee meeting. The proposal will likely keep businesses paying more to pay down debt and reduce benefits for workers who become jobless in the future.
Federal law also says the state needs to set aside more than $2 billion in reserves by 2019 to borrow interest-free in the future.
The mandate has small business scrambling to find revenue for additional taxes. A $21 per-employee increase will hit business in January, another tough blow for Elkin companies trying to create jobs.
“It’s a double-edged sword,” said Todd Tucker, president of Surry County Economic Development Partnership, Inc. “On one hand we need to get people off unemployment and back to work. On the other hand unemployment taxes are rising making it difficult for businesses to create jobs.”
Today, the maximum weekly unemployment benefit amount in North Carolina is $535.
Under the new proposal, the maximum benefit would be reduced to $350 per week with a 20-week benefit cap, an eye-opening change for up to 567 Surry residents currently exceeding the state’s 26-week cap by collecting unemployment for up to a whopping 99-weeks.
The 99-week federal extension of unemployment benefits is set to expire on December 29th unless U.S. Congress acts. An extension is unlikely.
Other business leaders state that extending unemployment benefits in the past made the jobless situation worse, as it developed a culture of dependency.
Alexandra Sirota with the North Carolina Budget & Tax Center, which advocates for the poor, disagrees that expanding benefits is to blame. She said reducing benefits would create an unnecessary strain upon the unemployed, causing them to rely more on credit, miss paying utility bills, all at a time when households have stretched the dollar as far as it can go.
“We shouldn’t change the benefit amounts,” Sirota said.
The center recommends keeping current benefit levels in place but raising employer taxes over time by using a greater percentage of the state’s average annual wage to calculate the tax.
Both business leaders and advocates agree that better re-employment and worker training efforts can get more people off unemployment and back to work especially in our own backyard.
“Right now Surry County has a skills gap,” said Tucker when discussing re-employment. “We have over 100 high paying jobs available right now in Surry County, many jobs in Elkin too, but not nearly enough applicants with the skills necessary to fill them.
“We have to look at all options with the understanding that we didn’t get into this high unemployment situation overnight,” continued Tucker. “We need a long-haul solution that doesn’t kill jobs and doesn’t shut down businesses, which at the same time helps people get on their feet again.”