The state has accelerated its estimate of when it will erase the massive debt it accumulated to pay unemployment benefits in the wake of the recession.
The debt owed the federal government, which peaked at $2.8 billion, has been whittled down to $597.4 million.
The state previously had been targeting paying off its debt by November 2015, but now expects to do so by August of that year.
The governor’s office issued a press release trumpeting the decline in the debt, which it attributed to the overhaul of the unemployment benefits system that was passed by the legislature last year and signed into law by Gov. Pat McCrory. The debt stood at $2.5 billion when McCrory took office in January 2013.
The revamped unemployment system reduced the maximum benefits a laid-off worker can receive by one-third and significantly cut the maximum weeks of benefits. Those provisions were stridently opposed by Democrats and advocacy groups for the poor.
“By paying off this debt early, North Carolina businesses will see lower taxes, making it easier for them to hire more workers and boost our state’s economy,” McCrory said in a statement.
The debt to the federal government has triggered higher federal unemployment taxes that are paid by businesses and other employers.
The amount of the debt can rise and fall from week to week, because the state still needs to borrow money at times to pay unemployment benefits. The bulk of the state unemployment taxes that are used to pay off the debt are paid by employers early in the year because the taxes are pegged to the first $21,000 in salary earned by their workers.
“It will still fluctuate but obviously when the debt is down $2 billion you’re headed in the right direction,” said state Division of Employment Security spokesman Larry Parker.