Unemployment bill moves to House floor

Bill moves to House floor; Democrats complain it’s being ‘rushed through’ 

dranii@newsobserver.comJanuary 31, 2013 

  • At a glance The bill to overhaul the state’s unemployment system would: • Reduce the maximum weekly unemployment benefits from $535 to $350. • Reduce the maximum weeks of benefits from 26 to a sliding scale of 12 to 20 weeks, depending on the state’s unemployment rate. • Eliminate federal emergency benefits that kick in after state benefits are exhausted. • Change the basis for determining the amount of weekly benefits an unemployed worker receives to his or her average wages over the last two quarters. Currently, benefits are based on the highest recent quarter of wages. • Limit to six the number of weeks of benefits a corporate officer of a closely held corporation can receive. • Add an additional “waiting week” before unemployment benefits kick in. Currently workers wait one week. • Raise the state unemployment tax rate for employers who pay the maximum rate from 5.7 percent to 5.76 percent on employee wages up to $20,900. Similarly, employers who currently pay 0 percent would pay 0.06 percent on taxable wages. • Give the state the power to garnish wages to collect unemployment benefits it overpaid as a result of fraud committed by an unemployed worker.

— Democrats took aim at a bill that would drastically overhaul the state’s unemployment system, but a bullet-proof Republican majority on the House Finance Committee took no heed.

Thursday morning’s 23-13 vote in favor of the bill sets the stage for the entire House to consider the measure Monday evening. An identical bill introduced in the Senate hasn’t been acted upon.

Later in the day, about two dozen House and Senate Democrats held a news conference to complain that the bill was being pushed through without sufficient consideration of how cutting maximum unemployment benefits by roughly one-third would affect the jobless.

“I’m offended a bill of this import, that hurts the unemployed of North Carolina as severely as it does; I’m offended that it’s rushed through on the second day of the session,” said Rep. Paul Luebke, a Democrat from Durham.

Speaking Thursday night in Rocky Mount, which is in the metro area with the highest jobless rate in the state, Gov. Pat McCrory said he supports legislation to reduce benefit payments for unemployed workers.

“(It was) not an easy decision for me, because there are people hurting right now,” he said, but “total reform” is necessary, even if it means the loss of extended federal benefits for 80,000 jobless workers.

McCrory’s fellow Republicans also portrayed the bill as a necessary evil that no one would celebrate.

“Nobody really likes this bill,” said Rep. Julia Howard, a senior Republican lawmaker from Mocksville and a bill sponsor. “There are no giveaways in this bill.”

The bill is designed to accelerate repayment of the state’s $2.57 billion debt to the federal government, money that was borrowed to cover the first 26 weeks of unemployment benefits. The state typically pays for those weeks but was unable to do so after unemployment soared during the recession. The state is still borrowing about $25 million a week to cover those benefits.

That federal debt is penalizing the state’s employers, whose federal unemployment taxes are rising $21 per employee each year until the debt is paid off. Individuals don’t pay unemployment taxes; businesses pay both federal and state unemployment taxes.

If the bill is enacted, the debt is expected to be repaid by late 2015 or early 2016. If the state does nothing, it wouldn’t be repaid until 2018.

Rep. Harry Warren, a Rowan Republican, argued that the higher unemployment taxes that employers have to pay until the debt is repaid is hurting the state’s ability to recruit new businesses.

“This is going to cost us jobs,” Warren said. “This is something we need to address today.”

Most employers would pay slightly higher state unemployment taxes under the bill. In addition, state and local government employers – which currently don’t pay state unemployment taxes but reimburse the state for the benefits received by their laid-off workers – would have to contribute to the state unemployment trust fund.

Luebke used data supplied by the legislature’s fiscal research staff to drive home the point that the brunt of the burden imposed by the bill falls on the unemployed.

Rodney Bizzell, a legislative fiscal analyst, replied in a response to a question from Luebke that the bill would reduce payouts to the state’s unemployed workers by an estimated $225 million in its first six months. By contrast, employers would pay about $20 million in additional state unemployment taxes through the projected repayment of the debt in 2015.

“It just seems to me that is so wrong – $20 million versus $225 million,” said Luebke, who added that it was “reprehensible” to take $225 million out of the pockets of the unemployed.

Bizzell said also that the employers would pay an additional $800 million in federal unemployment taxes until the debt is paid off, but Luebke said that was irrelevant. “Our bill is about the state taxation,” he said.

Democrats, who blame the current mess on a series of cuts in state unemployment taxes implemented in the 1990s, introduced several amendments aimed at softening the bill’s impact on unemployed workers – but to no avail.

Two amendments, including one that would have reduced the maximum weekly benefit to $425 instead of $350 while raising the unemployment taxes paid by employers, were voted down. Two others were dismissed on technicalities that Democrats claimed were illusory.

Staff writer Craig Jarvis contributed to this report.

Ranii: 919-829-4877

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