A North Carolina legislative committee approved a plan Tuesday to cut unemployment benefits and raise taxes on some businesses. Republicans behind the plan say those are necessary steps to pay back more than $2.5 billion the state owes the federal government.
This is an example of how North Carolina continues to pay for the recession, even though the recession is officially over.
The demand for benefits as people lost their jobs drained the money businesses set aside for unemployment insurance, so the state had to borrow from the federal government.
The plan approved in a joint committee Tuesday would pay back that debt by late 2015. Republican Senator Bob Rucho of Mecklenburg County is one of the legislators who came up with it.
"Everybody is picking up some of the burden to make a solvent system," Rucho said. "If we don't do what needs to be done, we won't have an (unemployment insurance) system available for anybody to use."
On the tax side, the federal government automatically increases taxes on businesses each year until the debt is paid off. On top of that, the plan would slightly increase state taxes on some businesses.
On the benefits side, the plan would slash the maximum weekly benefit from $535 to $350. It would also cut the number of weeks it offers unemployment payouts from 26 weeks to 20. When unemployment is low, the state would offer even fewer weeks – just 12.
The state house will take up the plan later this month.