| Jobless Debt |
| Wednesday, 13 April 2011 09:46 |
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BY YVONNE WENGER COLUMBIA -‐-‐ South Carolina will need anywhere from five to nine years to pay back the federal government for an estimated $2.5 billion in loans and interest as a result of the state's inability to provide unemployment benefits during the deep economic downturn. The long years of payback vary based on different ways to cover the debt, a consultant hired by the state told a panel of state legislators Wednesday. The state is borrowing $16 million a week to cut unemployment checks for laid-‐off workers, a number that has grown alongside the state's now record-‐high 12.6 percent unemployment rate. So far, the state's loans FROM the federal government have reached $790 million, a debt that is expected to top out at $2.1 billion with $462 million in interest. Then, the state needs to worry about rebuilding the fund for the next recession. Members of the Senate Labor, Commerce and Industry Committee heard recommendations by Boston-‐ based consultant The Lucas Group that outlined plans to pay back the money over five to nine years. Consultant John Stephen said South Carolina should make changes to the tax rates businesses pay while working harder to catch fraudulent claimants and doing more to help out-‐of-‐work residents find jobs quicker. Unemployment benefits are paid from contributions that businesses make for each year for every employee on the payroll. "You need to really work aggressively to get a handle on that immediately," Stephen said of the accumulating debt. "You're making the right decisions, but I have to tell you: You need to move quickly." The consultants told the senators that the state could save businesses that rarely lay off employees money by charging companies according to how frequently they send their workers to the unemployment line. If the state does not take action, it risks an across-‐the-‐board tax increase imposed by the federal government. Sen. Greg Ryberg, an Aiken Republican who has been leading efforts to fix the problem, said a solution must come fast. "I don't think we have the luxury of waiting," he said. The next step is drafting a plan to tax businesses to pay back the debt and rebuild the fund. The House and Senate have passed slightly different versions of a plan to overhaul the administration at the Employment Security Commission, which oversees the jobless benefits fund. The two bodies will have to agree on how to restructure the agency and then get the governor to sign off. |