State Seeks Independent Study On Unemployment Insurance Tax, Paying $2.5 Billion Debt

RALEIGH, N.C. (AP) -- The state Department of Commerce has released a formal bid request to hire someone to examine North Carolina's unemployment insurance tax structure and how to pay $2.5 billion in debt to the federal government seven months after the Legislature told the agency to begin a study.

The request filed Oct. 20 seeks an outside consultant to make recommendations so the state's Unemployment Insurance Trust Fund can regain and retain its solvency and the state can service the debt. The debt amount has grown during the previous recession and extended economic downturn as claim requests outpaced employer insurance tax contributions.

Commerce Secretary Keith Crisco, who told lawmakers Thursday about the bid request, suggested two weeks ago to a state senator that three reports from investment firms would suffice for the study. The studies suggested repaying the money with private debt at a lower interest rate than what the federal government requires to save money.

The senator, Bob Rucho, R-Mecklenburg, said those reports wouldn't cut it and criticized Democratic Gov. Beverly Perdue's administration for failing to expedite an outside study. Lawmakers approved the study idea this past March, although placed no formal deadline in the law on the study's completion date.

Crisco's department has been working for months to prepare for a scheduled Nov. 1 transfer of the Employment Security Commission, which manages the state's unemployment benefit programs, to direct control under his agency. Rucho argues their inherent problems with the agency that are contributing to the size of the debt.

"We wanted this study done so that come November we could begin implementation," Rucho told Crisco. Now, he added, "we don't even get a chance to have a road map to repair the damage that is happening every day."

A department spokesman last month attributed the delay in part to a lack of immediate funding for the study and merger issues with the commission. The law didn't appropriate money for the study but offered several options to pay for it, including spending commission money.

Crisco said the study recommendations could be available in February.

"We're here. Let's move forward," Crisco responded to Rucho. "Let's make it happen."

Higher unemployment insurance taxes for businesses are on the near and long-term horizon to pay off the debt and keep it off.

An additional 0.3 percentage point will soon be effectively added to the federal unemployment insurance tax rate for employers because of the debt. State unemployment insurance tax rates also could rise, the level of which could depend on how quickly the General Assembly wants to pay it off.

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