North Carolina Chamber Disappointed in Justice Center’s Woefully Inadequate Approach to Unemployment Insurance Crisis
RALEIGH, N.C. – Lew Ebert, president and CEO of the North Carolina Chamber, a nonpartisan business advocacy organization, has announced that the organization disagrees with the North Carolina Justice Center’s characterization of North Carolina’s unemployment insurance crisis as presented at a press conference this morning.
“The North Carolina Justice Center’s approach to North Carolina’s unemployment insurance crisis is a woefully inadequate answer to a major crisis in our state,” said Ebert. “To suggest that the disaster this program is currently facing can be corrected by simply raising taxes on job creators is extremely shortsighted and unsustainable, especially in this economy.
“While tax adjustments are an appropriate part of a comprehensive solution, the system must also shift its focus to getting out-of-work North Carolinians back into jobs, sensible benefits adjustments to bring the system to solvency, and wholesale reform to bring long-overdue accountability to a broken system.”
North Carolina’s unemployment insurance system currently owes $2.4 billion to the federal government for money borrowed to pay the state’s share of unemployment benefits it could not afford during the recession and its aftermath. Currently, the only public plan to pay this debt is tax increases on employers who are the only group that pays into the fund. Federal tax increases resulting from the debt are projected to cost employers nearly $400 million by the end of 2012.
“Making North Carolina jobs cost more, especially at a time our unemployment rate is higher than the national average, is certainly not an ideal solution for this serious problem. Anyone who would suggest otherwise is completely disconnected from economic reality,” said Ebert.
While business must shoulder part of an effective solution, it would be irresponsible not to address the problem as a whole, which includes ensuring that employer investments into the fund are managed efficiently and inserting accountability measures into the system. A lack of fiduciary responsibility and effective leadership in the past helped add to the debt significantly. For example, while taxes on employers were reduced, the benefit packages funded by those taxes were consistently expanded.
If North Carolina does not immediately service the $2.4 billion debt, it not only allows the federal government to continue to raise taxes on North Carolina jobs, but also extracts $78 million in interest payments out of the unemployment insurance trust fund that could have been spent on child care, health care or groceries for North Carolinians.
The North Carolina Chamber Foundation commissioned a comprehensive study on this crisis which outlines significant recommendations to restore solvency, integrity and affordability to this program in addition to returning its focus to reemployment. Bonding the debt is central to the study’s recommendations as it provides certainty, predictability and flexibility in repairing this broken system.
“We are a bit mystified by the North Carolina Justice Center’s response today,” said Gary Salamido, vice president of governmental affairs at the North Carolina Chamber. “The presentation they provided this morning was not intellectually honest. Taxes on all businesses are increasing – they are today and they will under the solution that the North Carolina Chamber is proposing as a result of our comprehensive study.
“It is unrealistic to ignore all aspects of how we got into this mess. It is clear that there is plenty of blame to go around, but we want to focus on the future and how we best solve this financial crisis. This issue is too important to make this a political debate.”
