North Carolina Pays Off Unemployment Debt To Federal Government | Eastern North Carolina Now

    Raleigh, N.C. — Governor Pat McCrory announced today North Carolina has paid off the unemployment insurance debt owed to the federal government. That debt was as high as $2.8 billion and stood at $2.5 billion when Governor McCrory took office in January 2013.

    "This will give employers certainty about the cost of doing business in North Carolina," said Governor McCrory. "Getting more North Carolinians jobs and fixing our broken unemployment system was a top priority when I entered office. Thanks to quick action and tough decisions, North Carolina's unemployment system is more efficient, more customer friendly and the time needed to settle appeals has been dramatically reduced. These steps, along with paying off this debt, are helping get more people back to work."


    Senate President Pro Tempore Phil Berger said the reforms put into place in 2013 have paid off for North Carolina workers and job creators.

    "In just two short years, North Carolina has successfully paid off a massive federal debt that was threatening our ability to keep existing jobs and making it harder to create and recruit new ones," Senator Berger said. "Sen. Bob Rucho and Rep. Julia Howard deserve special recognition for their leadership during the 2012 interim in bringing stakeholders together to find a solution to remove this tremendous burden off the backs of North Carolina businesses and create a sustainable unemployment system."

    ​Speaker of the House Tim Moore praised the legislative reforms passed by the General Assembly.

    "Several years ago a tough economy led the North Carolina House to make some tough decisions. Today, because of House Bill 4, many North Carolinians are back to work, and we get to witness how responsible leadership led to paying off our debt," Moore said.

    The debt was incurred when the state's unemployment trust fund ran out of funds in February 2009. North Carolina had to borrow from the federal government to pay for regular unemployment benefits and racked up the debt.

    "With this debt paid off, our state will be more attractive to employers who want to move here and create jobs," said North Carolina Secretary of Commerce John E. Skvarla, III. "This gives North Carolina a level playing field with 42 other states."

    Department of Commerce Assistant Secretary of Employment Security Dale Folwell noted that North Carolina is paying this debt off early, which will result in savings to employers.

    "Had the debt not been paid by November 2015, employers in this state would have been subjected to an additional $282 million in additional FUTA (Federal Unemployment Tax Act) penalties," Folwell said. "These monies can now be used by the employer community to assist with the expansion of their business and workforce."

    If a state has an outstanding loan with the federal government for two consecutive years, employers are penalized on their FUTA taxes annually until the debt is paid. North Carolina employers began paying this penalty in 2011. Since the FUTA penalty was imposed, employers have paid almost $700 million in FUTA penalties.

    Since 2011, North Carolina has had to pay interest on this debt. Employers will have paid nearly $262 million in interest payments alone over the past four years.

    "Now that we have paid this off, we need to keep the trust fund solvent," concluded Folwell.

• Contact: Crystal Feldman
•     govpress@nc.gov