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Originally published: 2013-02-20 10:30:05
Last modified: 2013-02-20 12:29:39

Governor signs unemployment bill

Big changes are coming to North Carolina's unemployment insurance system following Gov. Pat McCrory's signature on House Bill 4 on Tuesday.

The law is intended to more quickly eliminate the roughly $2.5 billion debt the state owes to the federal government. The debt began accumulating in February 2009 after the state exhausted its reserves for unemployment payouts and began borrowing federal money to assist out-of-work residents.

The law will:

-- Reduce the maximum weekly benefit for the unemployed from $535 to $350.
-- Reduce the maximum duration of benefits from 13-26 weeks to 13-20 weeks. (The range varies based on the state's overall unemployment rate.)
-- Change the calculation of weekly benefits to an average of the wages for the last two quarters worked, rather than the highest quarter's wage.
-- Raise state unemployment tax rates on employers by .06 percent and require nonprofits and governmental entities to pay a surcharge from which they were previously exempt.
-- Define any work as "suitable work" after 10 weeks of unemployment benefits.

The changes will apply only to unemployment claims submitted on or after July 1. Anyone currently receiving unemployment checks will not be affected. 

As a result of the law, North Carolinians also will no longer be eligible for up to 47 additional weeks of federal Emergency Unemployment Compensation, which is provided to those who exhaust their state benefits and still haven't found work. The EIC was supposed to end at the end of 2012, but was extended for another year.

Supporters say the law will benefit businesses by reducing their unemployment tax burden and allowing them to hire more workers and invest more in their businesses.

"I will not outsource these tough decisions," McCrory said. "This bipartisan solution will protect our small businesses from continued overtaxation, ensure our citizens' unemployment safety net is secure and financially sound for future generations and help provide an economic climate that allows job creators to start hiring again."

In the House, the bill passed 77-42, with most Republicans voting "aye" and most Democrats voting "nay." In the Senate, the bill passed 36-12, with all Republicans and only four Democrats voting "aye."

Sen. Dan Soucek and Rep. Jonathan Jordan voted for the bill.

Jordan said the change was critical to supporting the state's economy and inducing businesses to locate here. The federal government will increase employers' federal unemployment taxes by an additional $21 per employee per year until the debt is repaid.

"They're not going to move here if they're going to be part of paying back this huge debt that they had nothing to do with," he said.

Jordan said he has heard from numerous business people who were supportive of the bill.

"I want folks to know that we are interested in getting people back to work," Jordan said. "We are not interested in punishing people who are on unemployment."
Soucek could not be reached by press time Tuesday.

Others were not so positive about the law.

The N.C. Justice Center, a progressive advocacy organization, called it "a sad day for North Carolina."

"Hundreds of thousands of jobless workers thrown out of work through no fault of their own will face deepening poverty as a result of this decision," the group wrote. "Morally and economically, it is a shameful and shortsighted decision."