NC governor signs unemployment bill into law

North Carolina governor signs unemployment insurance bill that raises taxes, cuts benefits

Associated Press

RALEIGH, N.C. (AP) -- Gov. Pat McCrory signed into law Tuesday changes to North Carolina's unemployment insurance system that supporters say puts the plan on firmer footing and gives businesses more certainty. Critics say it will devastate the jobless with decreased benefits or none at all.

McCrory signed the bill in his state Capitol building office, a governor's spokeswoman said. The media wasn't invited to the signing, which was attended by several legislators who shepherded the bill quickly through the General Assembly in the first two weeks of this year's work session.

The unemployment plan repays $2.5 billion owed the federal government for jobless benefits paid since the Great Recession by cutting maximum weekly jobless payments from $535 to $350 on new claims beginning July 1 and the maximum number of weeks for state benefits from 26 weeks to 12 to 20 weeks, depending on the state unemployment rate.

The bill also raises state unemployment taxes, partially through the elimination of a zero-percent rate that about 30,000 businesses have been receiving. Federal taxes will continue to rise by $21 per employee per year until the debt is repaid and a 20-percent state surcharge will continue a little while longer.

McCrory, a Republican, announced during Monday night's State of the State address he would sign the bill, saying the state is going to stop borrowing money from the federal government without knowing how to pay it off.

All told, the changes will repay the debt by late 2015 — about three years earlier than if nothing had been done — and will put more than $2 billion in reserve by the end of the decade to pay future claims in the next economic downturn.

A handful of Democrats voted for the bill penned by Republicans.

"This bipartisan solution will protect our small businesses from continued over-taxation, 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," McCrory said Tuesday in a statement.

Federal emergency jobless benefits also will stop July 1 because the state changed its benefit structure, which isn't allowed under the "fiscal cliff" agreement last month. The U.S. Department of Labor said the decision by North Carolina to refuse the extra year of benefits after six months will affect 170,000 people and hold back $780 million in cumulative weekly benefits.

Critics accused McCrory and Republicans of supporting an imbalanced solution to the debt, whose origins go back 20 years after a series of employer tax cuts began but were never restored when benefit reserves ebbed. Unemployed workers will be hurt permanently with benefit cuts while many of the taxes will expire, most Democrats and their labor allies argue.

"As one of the first laws under his tenure, these cruel cuts will forever mar any legacy that Gov. McCrory hopes to leave behind," said MaryBe McMillan with the state AFL-CIO. "Only bullies kick people while they are down. Shame on our governor and our legislature for turning their backs on unemployed workers."

Dozens of business groups, led by the North Carolina Chamber, backed the overhaul. Chamber CEO Lew Ebert acknowledged in an interview that it was "tough medicine" for both businesses and workers but that it would ensure the system wouldn't be in such bad shape again.

"We're sending a strong signal. We're getting our house in order," he said.

McCrory's bill signing was his second as governor. He signed his first bill Monday on high school diplomas and vocational education in a public event in Asheboro.

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