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Originally published: 2012-12-07 09:56:37
Last modified: 2012-12-07 09:56:37

Plan released to tackle NC unemployment debt

Legislators unveiled a draft plan Wednesday designed to eliminate the roughly $2.5 billion debt North Carolina owes to the federal government for unemployment benefits.

The proposal calls for reduced payouts for jobless North Carolinians, shorter time spans in which the unemployed can collect and higher taxes on businesses, among other changes.

North Carolina’s debt has been accumulating during the last several years as high numbers of unemployed residents dwindled the state’s reserves. The Social Security Act allows for automatic advances from the federal government when those reserves become insufficient.

Under the proposal, presented to the Revenue Laws Study Committee Wednesday, the maximum weekly benefit for unemployed workers would be $350 instead of the current $535, according to committee documents.

The maximum duration of benefits also would fall from 26 weeks to 20 weeks, and that duration would vary on a sliding scale based on overall unemployment rates.

The proposal also would increase the state unemployment tax rates on employers by .06 percent and would require nonprofits and governmental entities to pay a surcharge from which they were previously exempt.

The plan also would redefine “suitable work” as any work after a certain length of time on unemployment, according to committee documents.

The proposal is expected to pay off the full amount by 2015, according to legislators.

According to the Associated Press, North Carolina is one of about 20 states that owe the federal government for unemployment benefits. In fact, the state is the third highest debtor behind California and New York.

The state’s seasonally adjusted unemployment rate was 9.3 percent as of October.

The proposal still must go before the full legislature after it reconvenes in January. If the plan were approved, it would go into effect July 1, 2013.