N.C. could face bill if Congress balks at extending federal unemployment benefits
North Carolina’s bulging debt from paying out long-term unemployment benefits could rise sharply if Congress fails to extend federal funds for the unemployed beyond Tuesday, according to the Employment Security Commission of North Carolina.
Unless Congress acts, some North Carolina unemployment recipients will have to turn to a state-supported “extended benefits fund,” said Larry Parker, a state ESC spokesman. The fund, created because North Carolina is among states with high unemployment, is supported half by the state and half by the federal government.
North Carolina already has borrowed $2.35 billion from the federal government — the fifth highest total among the states — to support its share of the fund. Now the fund may face a new demand from long-term unemployed workers whose payments were coming exclusively from federal dollars.
Those found eligible to draw from the state-supported, extended benefits fund will get paid regardless of whether Congress balks at extending purely federal payments, Parker said.
“People shouldn’t worry about getting paid,” Parker said. “We’ll continue to borrow as needed until we can determine a solution to the amount of money that is owed back to the federal government.”
North Carolina, like most states, traditionally provided unemployment compensation for up to 26 weeks. As the latest recession deepened and unemployment climbed, the federal government began providing funds to extend the benefits.
All together, up to 99 weeks of unemployment benefits have been available to help support unemployed workers. The latest extended benefits law signed by President Obama in July expires Nov. 30. Without action, the eligibility period for newly unemployed workers could revert to the 26-week standard.
The Nov. 30 deadline is the latest in a series Congress has faced and previously has agreed to extend. But the grinding length of the economic downturn, concerns about the rising federal debt and Republican victories in the midterm elections are weakening support for another extension.
Advocates for the unemployed are pressing Congress to extend benefits once more. They argue that cutting off the support only passes the burden of providing an economic safety net to states and weakens an already struggling economy.
In North Carolina where the unemployment rate was 9.6 percent in October, more than 300,000 residents are receiving unemployment benefits, Parker said. Between federal and state benefits, he added, the Employment Security Commission of North Carolina has paid out $5.4 billion in the last year.
Alexandra Forter Sirota, director of the NC Budget & Tax Center of the North Carolina Justice Center, a progressive advocacy and research organization, said those payments are essential to supporting not only North Carolina families, but their communities. She said spending by the unemployed helps others keep their jobs.
Should benefits end for many of the unemployed, Sirota said, the improving economy could backslide toward recession.
“There is a real concern that the modest gains we’ve seen could be undermined,” she said. “We know unemployment is going to be high for some time and this could send it back into double digits.”