NC Cuts Unemployment Benefits, Pays Down Federal Debt
North Carolina is on pace to pay back its huge debt to the federal government for unemployment insurance by the end of next year. That's largely because the state slashed unemployment benefits.
Because of the recession, North Carolina ran out of money to pay unemployment insurance. So the state had to borrow from the federal government, and that debt peaked at $2.8 billion in 2012.
Now, it's down to about $1.7 billion and on pace to go down to zero by the end of next year.
"It means that the legislation to bring solvency back to our unemployment system in North Carolina is working," said Dale Folwell, N.C. Assistant Secretary of Commerce.
The legislation he referenced passed last year, and it slashed unemployment benefits and slightly raised taxes on businesses to pay off the debt.
The General Assembly's fiscal research division estimated that this year, about 60 percent of the state's savings would come from the benefit cuts. In future years, the cuts to benefits will account for nearly three-fourths of the savings.