Governor will have final say on reviving unemployment benefits

Jan. 08, 2014 @ 10:41 PM

RALEIGH — Gov. Pat McCrory's administration was guarded Wednesday on whether it would seek to restore emergency benefits to the long-term unemployed should Congress pass a law allowing North Carolina back into the program.

General Assembly members who discussed the U.S. Senate bill questioned how useful it would be to revive the benefits for as few as the next three months. The federal government over the summer terminated the program for North Carolina's unemployed.

Should the bill become law, which is still in doubt, it will ultimately be up to the Republican governor to decide whether to negotiate a new agreement with the U.S. Department of Labor to let North Carolina workers receive the extended federal benefits again.

When asked later whether the governor supported the bill and a new agreement, McCrory spokesman Ryan Tronovitch replied by email: "If and when Congress moves forward and passes the legislation, we'll be happy to provide you a comment."

Assistant Commerce Secretary Dale Folwell, which operates the Division of Employment Security, told the oversight committee members Wednesday that his agency will have contingency plans to respond to whatever his boss or McCrory asks him to do.

The situation resulted when legislators passed and McCrory signed into law a bill in early 2013 that reduced maximum weekly state unemployment benefits — $350 is now the cap — and the maximum number of benefit weeks. Federal law prevented any state that changed its own benefits to keep receiving the emergency benefits.

The emergency relief continues after a worker's state benefits are exhausted. It was canceled at the end of June in North Carolina, but the law authorizing the benefits nationwide also expired late last month. The U.S. Senate bill to continue those benefits through the end of March also contains a provision, inserted by Democratic U.S. Sen. Kay Hagan, to allow North Carolina back into the voluntary program.

Republican legislative leaders say they passed the state reductions, along with higher unemployment insurance taxes for businesses, to hasten the repayment of $2.5 billion in debt owed to the federal government. The state borrowed the money when its unemployment taxes keep up with jobless benefits during the Great Recession. The debt has since been reduced to under $1.9 billion, Folwell said.

Folwell said it took a lot of work last summer to alert displaced workers about the end of the federal emergency benefits, including adjustments in a computer system that was built in the mid-1970s.

"I know what our agency went through in order to stop paying (emergency) benefits," he told the Joint Legislative Oversight Committee on Unemployment Insurance.

Federal officials predicted 170,000 people in North Carolina would miss out on emergency benefits. Folwell said 67,000 people received them during the final week in June.

The federal government pays for all the emergency benefits, but committee speakers suggested North Carolina's return to the program could negatively affect the state's repayment of its debt to the federal government.

Doug Holmes, president of a Washington-based association for businesses on unemployment insurance issues, told committee members by phone that displaced workers could be more inclined to exhaust state benefits to obtain the extended benefits. Holmes also said some members of Congress are interested in continuing the benefits beyond March — potentially offering as much as 37 more weeks beyond the 19 maximum weeks of state benefits allowed.

Bill Rowe with the liberal-leaning North Carolina Justice Center, which opposed the state benefit reductions approved in early 2013, doubted the extended benefits would be a disincentive for the unemployed to find jobs because they aren't for very much.

"It's not enough money to get by," Rowe said. "They want to go back to work."

Rep. Harry Warren, R-Rowan and a committee member, said after the meeting that he'd be OK if the emergency benefits were revived but was concerned about the effect on the debt repayment, which Folwell is seeking to complete by November 2015.

"So if there's a happy medium there, then that's fine," Warren said.

The benefits debate is shrouded by politics, particularly this year's U.S. Senate race.

Republican legislators on Wednesday criticized Hagan, asking why the provision to let North Carolina back into the program wasn't inserted months ago before the state unemployment overhaul took effect. Hagan and her re-election campaign say Republicans in Raleigh, particularly potential Senate election rival House Speaker Thom Tillis, shouldn't have made such deep benefit cuts and could have delayed any reductions by six months to avoid the need for a grandfathering provision.