Tuesday - September 30, 2014
State debt to federal government growing
Written by Josh Ellis/David Horn   
Thursday, 06 October 2011 04:13

(RALEIGH) -- North Carolina’s debt to the federal government continues to grow as a fund used to pay unemployment claims is not collecting enough revenue to keep it fiscally sound. The state now owes more than $2.5 billion to the federal government because of a negative balance in the North Carolina Unemployment Insurance Trust Fund.

North Carolina Budget and Tax Center director Alexandra Sirota said there are two main reasons why the debt is now at its current level.  "In the 90's we made the decision to cut taxes on employer's contributions to unemployment insurance trust fund and therefore were set up, by the time of the first recession in the 2000's, in a really inadequate position to meet the claims that were coming in," said Sirota.  And she added that the latest recession came and still has the economy struggling to recover.

Earlier this year, lawmakers authorized the Department of Commerce to study the problem, but that had not started six months later.  However, House Speaker Thom Tillis said he expects the study to get underway soon.
 
GOP leaders say they hope to get a solution to the unemployment fund in time for next year’s legislative session.

Last Updated on Sunday, 09 October 2011 19:00
 
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