During the first three weeks of the 2013 legislative session, the N.C. General Assembly has passed an unemployment reform bill, rejected expansion of Medicaid by the Affordable Care Act (ACA), and is pushing through legislation allowing the state’s Earned Income Tax Credit to expire.
Ratified Feb.14 and signed into law by Gov. Pat McCrory Feb. 19, House Bill 4 cuts maximum weekly unemployment benefits 35 percent, from $535 to $350, and reduces the duration of benefits.
Under the new law, the maximum duration of benefits “depends on the the seasonally adjusted statewide unemployment rate that applies to the six-month base period in which the claim is filed.”
Claimants may draw benefits on a sliding scale for up to 12 weeks if the unemployment rate is 5.5 percent, and up to 20 weeks if the rate exceeds 9 percent.
North Carolina’s jobless rate — currently 9.2 percent, according to the N.C. Division of Employment Security (DES) — continues to hover 2 points above the national average more than three-and-a-half years after the official end of the “Great Recession” in June, 2009. The state has not seen unemployment of 5.5 percent or less since April 2008.
New unemployment regulations are effective July 1, and do not affect any current claims or claims filed before that date.
By cutting benefits, the GA has violated the federal Emergency Unemployment Compensation (EUC) program’s “non-reduction rule,” which discourages states from reducing benefits before the EUC program expires.
According to the rule, “any state with legislation enacted on or after March 1, 2012, that violates the non-reduction rule and becomes effective before (Jan. 1, 2014) would be subject to termination of its agreement to administer (the EUC program).”
Pending a determination by the U.S. Secretary of Labor, House Bill 4 may cut off $60-100 million in federal jobless benefits to N.C. residents. Currently about 80,000 people in the state receive an average of $287 per week through the program, according to the DES.
House Bill 4 is titled as an act to focus N.C.’s unemployment insurance program “on putting claimants back to work.” Other than this mention, there is no language in the bill addressing “putting claimants back to work,” nor is any other bill on the GA legislative calendar presented as a comprehensive “jobs bill.”
Senate Bill 6, short-titled “No NC Exchange/No Medicaid Expansion,” rejects key provisions of the ACA which would offer medical insurance to hundreds of thousands of uninsured N.C. residents. The bill has passed readings in both the Senate and the House, and is now under review by a joint conference committee.
Gov. McCrory has announced his support of the legislation.
According to the bill, N.C. would “not expand the State’s Medicaid eligibility under the…Affordable Care Act.” Establishment of a state-federal insurance exchange is also rejected by the bill.
A 2012 report by the North Carolina Institute of Medicine (NCIOM) examining the impacts of the ACA in N.C. found “that there may be as many as 536,000 uninsured non-elderly adults in North Carolina who could qualify for Medicaid coverage based on the expanded income eligibility criteria in 2014.”
The report, which was commissioned by the N.C. Department of Insurance and Department of Health and Human Services and involved 260 people across the state, found that “Of the more than 1.7 million North Carolinians who are currently uninsured, 1.1 million are expected to qualify for insurance coverage if the ACA is implemented as the law is written.”
According to the report, “a person working at minimum wage ($7.25 per hour), 40 hours (per week), and 50 (weeks per year) would earn $14,500 (per year). The incomes of these low-wage workers are generally too high to qualify for Medicaid under North Carolina’s current Medicaid eligibility rules.”
The federal government would pay 100 percent of expanded Medicaid costs for newly eligible individuals for the first three fiscal years (2014-16), according to the NCIOM. After the first three years, the federal government would pay 95 percent of costs in FY 2017, 94 percent in FY 2018, 93 percent in FY 2019, and 90 percent thereafter.
The NCIOM also found that Medicaid expansion would have financial benefits to the state, bringing an influx of $1.3-1.7 billion a year, creating 18,000-25,000 jobs and generating $497 million in tax revenue over the next seven years.
The state’s Earned Income Tax Credit (EITC), an income tax break for low-wage workers, would be eliminated under House Bill 82, which has passed readings in the House and the Senate.
The bill would reduce the state’s EITC, which can only be claimed on income earned through work, from 5 percent to 4.5 percent of the federal EITC for tax year 2013, and allow it to expire “for taxable years beginning on or after Jan. 1, 2014.”
The N.C. Budget & Tax Center (BTC) reports that over 900,000 low-wage workers claimed the tax credit in 2011, with three out of five claiming the credit only for one or two years. Reducing and eliminating the EITC means a tax hike for 19 percent of the state’s income taxpayers earning $41,000 or less.
“The EITC is…one of the most effective anti-poverty tools nationwide, especially for children,” according to the BTC. “The federal EITC lifted approximately 293,400 North Carolinians — half of whom were children — above the federal poverty line between 2009 and 2011.”