North Carolina unemployment insurance

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Now that North Carolina has paid off its unemployment insurance debt, businesses will no longer face tax penalties, but the unemployed will still get the same reduced benefits. Labor organizers say that's not fair, and are calling on lawmakers to restore some of the cuts.

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North Carolina is working to eliminate a backlog of unemployment insurance claims. The state says the claims initially backed up as it started putting a greater emphasis on double-checking them.


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A bill to drastically cut unemployment benefits and slightly raise business taxes has cleared its last major hurdle in North Carolina. Republicans behind it say it's going to be painful, but it's necessary to pay back the $2.5 billion the state owes the federal government for help paying unemployment insurance.

How did the state build up such a massive debt?

Michael Tomsic

Governor Pat McCrory said one of the first bills he plans to sign into law will overhaul the state’s unemployment insurance system. McCrory is in favor of a Republican legislative plan that cuts benefits and raises taxes on some businesses.

When the economy tanked, North Carolina’s unemployment insurance system got way out of balance. Businesses fund it, and they weren’t putting enough in to cover the massive demand for benefits as unemployment soared.  

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Republican state legislators unveiled a plan Wednesday to reduce unemployment benefits and raise taxes on some businesses. They say those are necessary steps to pay back the nearly $2.5 billion the state owes the federal government for help paying unemployment insurance.

North Carolina legislative leaders will unveil a plan Wednesday to pay back a massive debt to the federal government. The state owes nearly $2.5 billion for money it borrowed during the recession to pay for unemployment insurance.

Legislators in charge of the plan to pay that back say the solution will likely include fewer benefits for the unemployed and higher taxes for some businesses.

North Carolina's unemployment insurance is fully funded by businesses. Most of them pay a tax on every employee they have, and that money goes into a giant trust fund.