Under the Dome

On top of shortfall, U.S. debt payment looms

January 18, 2011 

North Carolina, which has borrowed billions from the federal government in recent years to pay unemployment benefits, will soon have to start paying some of that money back.

The first interest payments on the roughly $2.5 billion the state has borrowed since February 2009 is due in September. Probably not something state legislators, already facing a $3.7 billion budget shortfall, need to hear right now.

North Carolina is one of 30 states that owes money for its unemployment programs, a situation caused by the length and severity of the downturn and the fact that many states entered the recession with too little money saved up to pay benefits.

Only a handful of states have borrowed more than North Carolina.

State officials hoped the economy would recover by the time the first interest payments were due.

But North Carolina's unemployment rate stood at 9.7 percent in November. As of late November, 323,870 people in the state were receiving benefits and extended benefits.

In late 2009 - when the state's tab was $1.4 billion - officials didn't have a definite plan for how to pay off the debt. The best hope was that Congress would forgive a portion, if not all, of the money.

That has become less likely given Republican gains in Congress and their pledge to reduce government spending.

The only source for the unemployment insurance fund, other than federal loans, is the unemployment insurance tax that employers pay. The tax is capped at 5.7 percent of taxable payroll.

State officials have been reluctant to raise the tax for fear it would increase financial pressure on already struggling businesses. And the state's incoming Republican legislators have said they do not want to increase taxes.

Some states are considering borrowing the money to pay the federal government. Others may just ask for more time.

Senate staff shuffle

Musical chairs continue on the Senate staff with Republican Phil Berger replacing Democrat Marc Basnight as Senate leader.

Berger has named Amy Auth, who was the spokeswoman for Pat McCrory's 2008 gubernatorial campaign, to be his communications director. Auth also served as press secretary to U.S. Sen. Elizabeth Dole and U.S. Rep. Virginia Foxx.

She advised Berger on media matters for several months last spring.

She replaces Brent Woodcox, who is moving over to become counsel to the Senate Redistricting Committee. Woodcox is a former state GOP spokesman.

Meanwhile, Schorr Johnson, who was Basnight's communications director, has moved over to become communications director for Lt. Gov. Walter Dalton.

Amy Fulk, who has been Basnight's chief of staff since 2006, is starting her own public relations firm, called 30 Public Relations. She will help clients in communications and strategy but does not intend to lobby.

A shift in sergeants

Democratic politicians aren't the only ones whose world was rocked by the November election. Those whose jobs are tied to political patronage also are usually shown the door when the power changes hands.

On his way out is Robert Samuels, who served as the House sergeant at arms for 12 years.

"I was told they had another one," Samuels told the Greensboro News & Record. "I understand politics, and this is all well with me."

The sergeant at arms keeps order on the floor of the House and in committees.

The paper reported that Clyde Cook, who served as sergeant at arms the last time Republicans held the House in the 1990s, will return to hold the position again.

Contributions by David Bracken, Rob Christensen and Mary Cornatzer

rob.christensen@newsobserver.com or 919-829-4532

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