Unemployment Benefits Reserve Restored

Document created by 1002043 on Nov 13, 2015
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george pic for news.jpgNorth Carolina has restored its unemployment insurance reserve to more than $1 Billion according to a recent announcement by Governor Pat McCrory at the Division of Employment Security (DES).  This means that employers will no longer have to pay a 20% state unemployment insurance tax surcharge that has been in effect for 10 years.  In fact it is estimated that the end of the surcharge (effective January 2016) could result in $240 Million to $270 Million in annual savings for North Carolina employers.  This reserve is intended to provide for unemployment benefits in future economic downturns.


The Governor gave credit to DES employees for transforming their agency into one of good customer service and for innovative ideas for more efficient agency operations.  ECNC (Employers Coalition of North Carolina), CAI's public policy organization, also played a major role enabling North Carolina to pay off its $2.8 Billion debt to the feds and restoring the unemployment reserve.  North Carolina paid off its $2.8 Billion dept to the federal government effective April 30th, 2015.  This debt retirement was accomplished in only two years, earlier that expected.


CAI/ECNC co-sponsored an independent study with the NC Chamber to find sensible solutions to the tax burden with goals to repay the dept in an orderly manner, return the system to 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 , passed in the 2013 Session of the General Assembly, were as a result of this meaningful study.


Our state's debt to the federal government was the result of the past economic downturn, combined with unemployment fraud, over payments of benefits to claimants, other inefficiencies at the then ESC (Employment Security Commission) and tax breaks for employers. The debt triggered by federal law resulted in an unemployment tax increase for employers.  According to the McCrory Administration, North Carolina employers paid $1 Billion in penalties and interest to the federal government between 2011 and 2014.


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.

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