NC unemployment fund drops

Written by Michael Handy

RALEIGH, NC (WBTV) - North Carolina's unemployment rate is skyrocketing, and now the state might not be able to keep up financially with all the people who are losing their jobs.  It soon could run out of money to pay unemployment benefits.

Along with the country's unemployment, North Carolina's unemployment rate has been steadily rising this year.  It was less than 5 percent in January.  By July it was more than 6 percent, and in October it stood at 7 percent.  November's numbers have not been released.

Thankfully the state does have a plan, and it is going to be a much-needed plan.  That is because the state is spending about $130 million a month on payments to those who have lost their jobs, but it has just $280 million in its unemployment reserve fund.

It is no longer a question of if, but when will the state's unemployment fund run out of money.  The most likely answer is sometime in the first quarter of next year.  That is when Wachovia, Bank of America, plus several other major employers will officially layoff thousands of people in Charlotte and across the state.

Officials with North Carolina's Employment Security Commission say they expect to collect as much as $700 million in the first half of 2009, but chances are that is still not going to be enough to pay for the expected growth in unemployment.

If the fund does run out, state officials say they have a plan in place.  According to the News and Record of Greensboro, the state would start borrowing money from the federal government.

That would be a last resort, but it is looking more and more likely as the unemployment fund gets closer to empty.  State officials say borrowing the money is the only way to keep businesses from having to pay higher taxes for unemployment insurance.