Committee Proposes Major Changes to Unemployment Insurance Program

Today’s Revenue Laws Committee meeting included a rollout of proposed changes to North Carolina’s unemployment insurance program. Recall that NC is facing a $2.5 billion debt to the federal government that must be repaid. Under the current repayment guidelines set up by the federal government, the debt would be repaid through an annual increase in the federal portion of the unemployment insurance tax paid by employers. The debt would be repaid by the end of 2019, with the average per employee federal UI insurance cost growing to  $189 above current levels (the state also levies an UI tax).

The Revenue Laws Committee decided that option was unacceptable, and has drafted legislation that would repay the UI debt back four years sooner through a combination of expanding the state UI tax on employers along with modifications to benefits. Following is a summary of the most significant changes:

• The minimum state UI insurance rate would increase from 0 percent to 0.6 percent, the maximum from 5.7 to 5.76 percent
• Local and state government employers and nonprofits would begin paying a 20% “surcharge” on their UI tax that they hadn’t previously been paying (private for-profit businesses are already paying the surcharge). This is especially relevant for major non-profit hospitals
•  The current 26 week benefit limit would be lowered to 20 weeks for most UI eligibles, but during times when state unemployment is below 5.5 percent, the maximum duration would drop to 12weeks for most
• The maximum weekly benefit would be statutorily be set at $350, a change from the current method of using a formula (the current max is $535). Researchers said the new max would be much more in line with other states in the region
• Some minor changes in eligibility are also included, slightly tightening the rules to qualify for UI benefits

The Committee voted to agree to the plan as outlined, and will meet again on Jan. 8 to vote whether or not to approve the legislation and thus move it to the legislature for consideration.