RALEIGH — The state House late Monday gave preliminary approval to a measure aimed at ridding North Carolina of its $2.6 billion in unemployment debt more quickly through lower jobless benefits and higher taxes.
The chamber voted 78-41, largely along party lines, in favor of the measure. The Republican majority that drew up the fix for the hemorrhaging unemployment insurance system defeated several Democratic amendments designed to ease the burden upon displaced workers.
Businesses would see federal unemployment insurance taxes rise until the debt is repaid in 2015 — about three years earlier than otherwise would occur. Some but not all state unemployment taxes would remain permanently higher even after the state’s unemployment benefit trust funds gets replenished beyond $1 billion to prepare for the next recession.
If the state does nothing, North Carolina will remain for years at a disadvantage to other states with trying to recruit new jobs and industries because any business that builds or expands in the state will have to keep paying higher taxes, said Rep. Julia Howard, R-Davie, the bill’s chief sponsor.
The bill is “a fair balance to fix the program,” Howard told colleagues, adding that “if you campaigned on creating jobs in the state North Carolina, than this is the No. 1 bill that you’re going to have this year.”
Opponents said the measure unfairly placed too much of the load of fixing the problems upon workers.
“We’re punishing innocent people who don’t deserve it,” said Rep. Alma Adams, D-Guilford. “Yes, we do need to stabilize this unemployment compensation fund, but this is not the way to do it.”
A final House vote is expected today. Senate Republicans and Gov. Pat McCrory also have said they support the bill.
The failed amendments tried to eliminate provisions in the measure that would cause maximum weekly benefits to fall by one-third to $350 and scale back the maximum length of state benefits from 26 weeks to 20. An effort to push back the July 1 enactment date until next January to preserve federal emergency extended job benefits for another six months also fell well short of passage.
The federal benefits would be cut off to 80,000 workers receiving a total of $25 million a week that gets plowed back into the economy to pay rent, groceries and utilities, bill opponents said.
“If you want them to lose their homes, if you want them to lose their respect, go ahead — kill the amendment,” said Rep. Mickey Michaux, D-Durham. He said lawmakers were to blame for the debt by cutting unemployment taxes in the 1990s and failing to restore them before the Great Recession: “Don’t let 80,000 people suffer because of the mistakes that we made.”
Howard said it was a surprise that the benefits were extended at the last minute as part of the fiscal-cliff solution on Capitol Hill in early January. Republicans said the federal government shouldn’t prevent the state from fixing its own problems.
“Let us put our fate in our own hands,” Howard said.
Bill supporters, who include dozens of business organizations, say current maximum benefit levels are out of line with the rest of the Southeast.
Union representatives and other worker advocates urged legislators earlier Monday to slow down the legislation so that they could offer alternatives that wouldn’t lower benefits so dramatically. A representative for the United Auto Workers showed a video of six previously unemployed truck plant workers who said they survived long bouts of joblessness thanks to their benefits.
“That bill is devastating to North Carolina families and to North Carolina workers,” said Robert Riggins, who works at Freightliner’s Mount Holly plant.
Four Democrats voted with the majority Monday night in passing the bill, while three Republicans voted no.