NC Pays Off $2.8 Billion UI Debt to Feds (5/11/15

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The Employers Coalition of North Carolina (ECNC) was created to give the business community a more focused avenue of public policy input concerning day to day employer-employee workplace issues. ECNC is a partnership of three North Carolina employers’ associations: CAI (Capital Associated Industries), TEA (The Employers Association) and WCI (Western Carolina Industries) and their 2500 members.

 

Governor Pat McCrory announced Tuesday, May 5th,2015 that effective April 30th that North Carolina had paid off its $2.8 billion unemployment debt to the federal government.  The announcement was made in the Old House Chamber of the State Capitol.  Not only was the debt paid off, it was paid off in two years, a year earlier than expected. 

The announcement was made with dignitaries present from the NC House and the NC Senate such as Senate Leader Phil Berger, House Speaker Tim Moore and Dale Folwell, Assistant Secretary of Commerce who heads up the DES (Division of Employment Security).

Governor McCrory gave credit to co-authors of the unemployment legislation (Senate Bill 4) Representative Julia Howard and Senator Bob Rucho.  Much credit was also given to Secretary Folwell and his staff for implementing the provisions of Senate Bill 4, effectively overhauling North Carolina’s broken unemployment system. 

North Carolina’s unemployment system was indeed broken due to several factors including mismanagement at the Employment Security Commission, benefits being paid out far outweighing taxes being paid in, benefit levels drastically higher than neighboring states and unemployment law that needed revision such as definitions of “misconduct” and “good cause to quit”. 

According to state officials, employers have been paying penalties and interest since 2011 totaling $962 million.  With the debt being paid, no longer will employers pay penalties and interest on such resulting in lower FUTA (Federal Unemployment Tax Act) taxes.

The ceremony ended with Representative Howard and Senator Rucho, with the help of some large scissors, cutting up a large United States Government cardboard credit card symbolizing “paid in full”.

CAI/ ECNC co-sponsored an independent study with the NC Chamber to find sensible solutions to the tax burden with goals to repay the debt in an orderly way, return to system solvency, and to use a balanced approach, improving North Carolina’s competitiveness, system affordability and positive re-employment results.  Many of the provisions included in Senate Bill 4 were a result of this enlightening study.

 

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