The final unemployment-benefit lifeline for about 23,000 North Carolinians appears likely to be cut off as scheduled on Jan. 28.
Although Congress agreed Dec. 23 to extend federal benefits for two months, it appears unlikely that the General Assembly will agree to allow North Carolina to borrow more money from the U.S. Labor Department.
As of Dec. 29, North Carolina had borrowed $2.67 billion from the federal government — the fourth-highest amount among 27 participating states — to pay up to 20 weeks of state-extended unemployment benefits.
Those benefits are available only after claimants exhaust up to 26 weeks of initial state benefits and up to 53 weeks — representing four tiers — of federal benefits. There are 4,777 people in the Triad and Northwest North Carolina in the extended state benefit level.
The state's unemployment rate was 10 percent in November. The national rate was 8.5 percent in December, officials announced Friday.
The last day to qualify for the extended state benefits is today. Anyone in that benefit level — regardless of what week they are in — will lose those benefits Jan. 28.
"Right now, no changes have been made in terms of the state extension," said Larry Parker, spokesman for the N.C. Division of Economic Security.
Parker said the state and federal governments traditionally split the cost of extended state benefits. In early 2009, the federal government picked up 100 percent of the cost through stimulus funding. That funding has run out.
The borrowing has become a hot-button issue for many Republican legislators.
Some legislators say extended benefits serve as a disincentive to reducing unemployment by allowing claimants to delay the start of an earnest search for work. Others say the state just can't afford to keep borrowing despite the need.
"The system is broke and broken," said Rep. Dale Folwell, R-Forsyth and House speaker pro tem.
"This $2.6 billion problem creates uncertainty for all businesses that may have to lay more people off just to pay the (unemployment tax) assessments that are coming out of Raleigh."
The state may require employers to pay a higher unemployment tax to help pay off the federal borrowing.
"That is the exact opposite behavior that we desire and will result in more unemployment and more taxes," Folwell said.
North Carolina's jobless rate appears to have improved enough that the legislature would have to amend certain criteria to continue to qualify to borrow the federal dollars.
"We are following federal guidelines here, and that is the reasoning" behind ending the benefits, Parker said. "We want to make sure we're really trying to inform people as best we can."
N.C. Sen. Peter Brunstetter, R-Forsyth, said that Lynn Holmes, assistant state commerce secretary for employment security, alerted his staff to the issue Tuesday.
"There has been no opportunity to pull our group together as yet to consider the issue," Brunstetter said.
That the state's jobless rate is slowly declining is good news, said John Quinterno of the Chapel Hill research firm South by North Strategies Ltd.
"You'd like to say, 'Hey, the unemployment rate is coming down; you don't need extended unemployment benefits,' " Quinterno said.
"But people are out longer and longer. These benefits become, in some ways, even more important the longer you are out of work.
"Any time with unemployment, when you pull away that lifeline for a lot of folks, there are the negative effects on individual households that take advantage of those benefits."
People who exhaust their state and federal benefits find themselves in a frustrating Catch-22. Essentially, their unemployment payments are over unless they can get another job, and get laid off again, at which time they will be eligible for new benefits.
Even as the state economy crawls to recovery, many employers remain reluctant to hire, particularly full time.
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