Questions raised about extending unemployment benefits in N.C.

by David Ranii, Under the Dome, News and Observer, January 8, 2014.

If Congress passes a new law that clears the way for North Carolina’s jobless to once again receive federally funded extended unemployment benefits, it’s not a slam dunk that the state would agree to go along.

Members of the state legislature’s joint oversight committee on unemployment insurance were told at a hearing Wednesday that there would be logistical and financial implications to making the benefits available to unemployed workers who exhaust their state-funded benefits.

The decision on making those extended benefits available would be up to Gov. Pat McCrory.

Bill Rowe, the director of advocacy for the N.C. Justice Center, which represents the interests of the poor, said he is “a little concerned” that McCrory might reject the extended benefits – if Congress approves them – based on the tenor of the hearing.

McCrory himself hasn’t staked out a position.

“If and when Congress moves forward and passes the legislation, we’ll be happy to provide you a comment,” McCrory spokesman Ryan Tronovitch wrote in an email message.

There is a precedent for saying no to federal aid. Last year, McCrory rejected federal funds for extending Medicaid health insurance to more of the state’s poor.

North Carolina’s jobless ceased being eligible for extended federal unemployment benefits as of July 1, when a new state law cut the maximum benefits by roughly one-third. Federal law required states to maintain their benefit amounts in order to qualify for extended federal benefits.

However, Congress, which allowed those extended benefits to expire as of Dec. 28, is considering new legislation that would restore those benefits. The bill being considered by the U.S. Senate includes a provision that would make North Carolina’s unemployed eligible for extended benefits after their state-funded benefits expire, through March 31.

Unemployed workers in North Carolina whose extended federal benefits were cut off last year would once again receive benefits under the bill.

The provision to restore North Carolina’s eligibility was pushed by Sen. Kay Hagan, a Democrat facing a challenging re-election battle this year.

Although those extended benefits would be paid by federal dollars, it would increase the outlay of state-funded benefits because some unemployed workers will be less interested in finding a job quickly if they can count on months of additional benefits, said Doug Holmes, president of UWC – Strategic Services on Unemployment & Workers’ Compensation, which is based in Washington, D.C., and represents businesses.

“How much of that would happen is somewhat difficult to quantify,” said Holmes, who spoke with legislators by telephone.

Higher outlays of state-funded unemployment benefits could throw off the state’s schedule for repaying its considerable debt to the federal government, money that was borrowed to cover state-funded unemployment benefits after unemployment soared beginning in 2008.

The state’s new, lower benefits were approved by the legislature to accelerate the repayment of that debt, which peaked at $2.8 billion and triggered higher federal unemployment taxes for businesses. Today the debt has been reduced to $1.845 billion, ahead of some projections, and the state anticipates paying off the debt entirely by late 2015 or early 2016.

Rowe said he doubted that making extended federal benefits available would delay debt repayment because the maximum weekly benefits available under the new law – $350, down from $535 under the prior system – is too skimpy for anyone to live comfortably.

Holmes also said there would be logistical issues associated with offering extended benefits in North Carolina because the Senate bill only calls for reviving the benefits through March 31.

Some states are saying they may not agree to make the extended benefits available because they “don’t have the administrative capacity to ramp up and then ramp down” so quickly, he said.

Holmes said that the White House has suggested that the three-month extension could be a placeholder for a longer-term extension, but added: “I’m not sure the votes are there for that. Certainly the House would resist that idea.”

Dale Folwell, who heads the state Division of Employment Security, told the legislators that offering extended benefits in North Carolina wouldn’t be easy given the state’s antiquated computer system “that was built the year I graduated from high school.”

“I know what our agency went through to stop paying (extended federal) benefits,” he said.

The end of extended federal benefits in North Carolina affected about 70,000 unemployed workers last year and became a political flashpoint.

Democrats railed that their Republican colleagues, who control the legislature, were being mean-spirited by slashing the amount of state-funded benefits and simultaneously triggering an end to federal benefits. Republicans contended they were being fiscally responsible and helping the state’s business community, which must pay higher federal unemployment taxes until the debt to the federal government is repaid.

The issue also has triggered criticism of Sen. Hagan by top state Republicans, including Senate Majority Leader Phil Berger and House Speaker Thom Tillis, who is seeking Hagan’s seat.

They complain Hagan sought to score political points in an election year by pushing to restore extended federal benefits and should have acted last year to avoid having them cut off.

Hagan has argued that when Berger and Tillis asked her to push for a waiver in December 2012 the state legislature hadn’t even passed its law, making it impossible for her to act. Republicans say she still could have acted sooner than the end of 2013.

Hagan spokeswoman Amber Moon said in an email message that Berger and Tillis were trying to “shift blame” after pushing through a law that they knew would disqualify the state from extended federal benefits.

Berger spokeswoman Shelly Carver said late Wednesday that she wasn’t able to reach Berger for comment about whether he’s in favor of the governor agreeing to extended federal benefits if the bill pending in Congress becomes law.

“We really don’t comment on hypothetical legislation,” said Anna Roberts, a spokeswoman for Tillis.

Tillis spokesman Jordan Shaw said Tuesday that Tillis would have voted against the measure in Congress that removed a procedural roadblock to restoring the benefits for North Carolina and the rest of the nation. Republicans are insisting the $6.5 billion cost of extending unemployment benefits must be paid for by cutting spending elsewhere.