NC jobless insurance fix nears final passage

RALEIGH, N.C. (AP) -- A Republican plan to cut jobless payments and raise business taxes to speed repayment of North Carolina's $2.5 billion federal debt on unemployment benefits won tentative approval Tuesday in the state Senate, all but ensuring enactment this summer.

Four Democrats joined GOP senators in voting 36-13 for the House measure, which would cut maximum weekly benefits for new jobless workers July 1 by one-third and reduce the maximum duration of state benefits from 26 weeks to 20.

Businesses both large and small would keep paying higher federal taxes until the debt to the federal government is repaid. Under the accelerated plan, that would probably now be late 2015, instead of three years later if no changes to state law were made. State taxes would go up slightly on a permanent basis, while a surcharge would remain in place until there's a $1 billion cushion in the state trust fund to pay future benefits.

A proposed decline in maximum benefits to $350 per week would bring North Carolina's amount about to the average of other Southeastern states, supporters said, while the current maximum of $535 per week is the highest in the region and has been labeled a disincentive for some to find work.

The overhaul "tries to take care of the unemployed," said Sen. Bob Rucho, R-Mecklenburg who is shepherding the House bill through the Senate, but "it doesn't put an excessive burden upon the employers that are struggling." Rucho said repaying the debt more quickly gives certainty to businesses and can help them create jobs again.

The House passed the bill last week. A final Senate vote was expected Wednesday on the bill. If approved, it would then go to new Gov. Pat McCrory, who would be asked to sign the bill into law. The Republican said in an interview Tuesday he supports the overhaul, which is designed to get the state trust fund on firmer fiscal footing before the next recession and avoid debt in the future.

"I firmly believe that North Carolina should not be living off of a credit card and not paying off that credit card. I plan to pay off that credit card," McCrory said, speaking earlier in the day at a Raleigh forum organized by the Institute on Emerging Issues. "And it's going to come to sacrifice to both businesses and people."

Labor activists and most Democrats said the measure is weighted against displaced workers by forcing them to shoulder more of the burden. Reductions in the duration of benefits and amount would comprise nearly three-quarters of the $3.6 billion in the cumulative changes required by the bill through 2017, legislative researchers estimated in a document.

Businesses received unemployment tax reductions several times during the 1990s, but the taxes were never restored to prepare for recessions when jobless payments outstripped tax revenues during the Great Recession, said Sen. Ellie Kinnaird, D-Orange.

"Over and over and over the employers came, as if there were no lean times ever coming up," Kinnaird said, "and yet we are not giving employees help this time now."

Senate Democrats offered a half-dozen amendments, five of which were defeated on party-line votes. A sixth amendment by Sen. Floyd McKissick, D-Durham, that would have reduced maximum weekly benefits to $422 per week but require all workers to pay a 0.48 percent tax on wages to help pay down the debt was withdrawn. A vote potentially could have harmed Democrats politically for supporting a broad tax increase.

Democrats also pleaded with the majority party to delay enactment on the bill until next January so a full year of federal emergency jobless benefits would continue. The benefit reductions meant the benefits must be cancelled after six months, affecting 170,000 unemployed workers that would otherwise receive $780 million, according to the U.S. Department of Labor, whose acting commissioner spoke against it Monday.

"People in my district are going to be hurt significantly," said first-term Sen. Mike Woodard, D-Durham. "They're clearly going to have fewer dollars. Their benefits are not going to last as long."

Rucho and others said waiting another six months would cost businesses another $400 million in taxes, but Democrats said that problem could be fixed with issuing state debt to avoid the extra taxes.

Sen. Tommy Tucker, R-Union, who owns a heating and air conditioning service company, said he was unhappy with the solution of higher taxes upon companies like his own. He said he'll owe more than $110,000 in unemployment taxes on his 77 employees and still may be forced to lay off one or two because of increases. But Tucker said he voted for the bill to remove the burden of the debt off businesses.

Senate Democrats voting for the bill were Clark Jenkins of Edgecombe County, Gene McLaurin of Richmond County, Ben Clark of Hoke County and Michael Walters of Robeson County.