UNEMPLOYMENT DEBT BURDEN AVOIDED

September 27, 2021
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An article last week told the story of 10 states plus the U.S. Virgin Islands that owe the federal government one billion dollars in interest payments alone for the $45.6 billion they borrowed in unemployment funds during the COVID economic crisis in 2020.

Thank goodness we’re not in that mess.

The NC House sent out press messages about the article, pointing out how responsibly our legislators here in North Carolina have managed the COVID crisis without putting our state in deep debt – and the subsequent fiscal hole it would have put us in.  As they said: “Prudent managing of the state budget by the Republican-led legislature has kept us out of such an awful position.”

The states that did take on this debt burden to pay unemployment funds:  California, New Jersey, New York, Massachusetts, Pennsylvania, Colorado, Connecticutt, Minnesota, Illinois, and Texas.

The Real Clear Policy article points out the obvious: “Since unemployment benefits are funded by taxes levied on businesses, those 10 states could see big tax hikes on employers next year.”  Again, so glad we avoided that.

It reminded us of the last time our state faced an unemployment fund-related debt crisis.  It’s a story not many people remember.

REMEMBER WHEN

The state’s Unemployment Trust Fund ran out of money in 2009.  To pay out unemployment funds to those that needed it, the state borrowed from the federal government and built up the debt.  It was as high as $2.8 billion under the liberal state legislative leadership at that time.  By 2013, conservative legislative reformers had put together a package to address the huge debt burden.  The law that passed finally paid off the debt early in May, 2015, taking the pressure off NC employers.  Their actions helped build back a responsible unemployment system.

Paying the debt off helped make the state once again attractive to employers that in hand helped create more jobs and rebuild our economy.  And paying the debt off when they did kept businesses from having to pay hundreds of thousands of dollars more in Federal Unemployment Tax Act penalties.

Ever since, Reform Majority legislators have worked extra hard to make sure we never have another situation where the Unemployment Trust Fund’s solvency could be in jeopardy.

When the liberals start up their wish list and try to put us back in the debt quagmire with their old-style spend and tax solutions, it pays to remember the amazing accomplishment of 2013’s tax reform measures.

We’re so thankful we have leadership in place still today that ignores the liberal pleas that would tempt us into the unemployment debt trap other states now face.


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