State House Republicans submitted legislation Wednesday that would compel the Cooper administration to withdraw from a federal extended unemployment-benefits program before its Sept. 6 expiration date.
The latest version of the federal Pandemic Unemployment Compensation program provides a $300 weekly benefit to eligible unemployed and furloughed North Carolinians.
Senate Bill 116 had passed the Senate on March 1 as a high school sports-attendance reopening bill.
The bill has been renamed as “Putting North Carolina Back to Work Act.”
Rep. Jason Saine, R-Lincoln, added language about the bill that would bar the N.C. Division of Employment Security to authorize or administer the $300 payments. The legislation would not go into effect until 30 days after it becomes law.
Democratic Gov. Roy Cooper has signaled he has no plans to withdraw North Carolina from the federal program that extends the extra $300, meaning the bill could become the next veto test of wills with Republican leadership.
The revamped version of SB116 cleared the House Finance committee Wednesday. The bill is on the House floor calendar for Thursday’s 11 a.m. session.
If the House approves the bill, it would be returned to the Senate for concurrence. If the changes are rejected, the likely next step would be to send the bill to a concurrence committee.
A potential sweetener to SB116 is legislation that would exclude unemployment compensation payments from state taxable income, similar to how the federal American Rescue Plan Act of 2021 excluded payments as federal taxable income.
Individuals who paid federal taxes on their federal unemployment benefits have or will receive a refund from the IRS.
The Senate’s version of return-to-work legislation, placed into House Bill 128, cleared the Senate by a 34-11 vote Tuesday.
The headline piece of HB128 is offering a $1,500 bonus as an incentive to unemployed claimants going back to work. The latest version makes the bonus available within 30 days of HB128 becoming law.
There’s also a bonus of $800 for unemployed claimants returning to work between 31 days and 60 days of HB128 becoming law.
Republicans legislators “don’t have much leverage to force the governor to back out of participating” in the federal unemployment program, said John Dinan, a political science professor at Wake Forest University and a national expert on state legislatures.
“They have an eye for making their case to the general public, and perhaps putting some pressure on the governor and some Democratic legislators, and at least putting Democrats on the defensive on this issue.”
Dinan said there was little chance Democratic legislators would support an override vote on a potential Cooper veto.
Reaching a compromise between the House and Senate’s return-to-work legislation will be challenging, said Mitch Kokai, senior policy analyst with Libertarian think tank John Locke Foundation.
“Given the ongoing delay in state budget negotiations, it’s not entirely clear that the House and Senate will move quickly to resolve their differences over federal unemployment funds,” Kokai said.
“If legislators vote along party lines, Cooper would be more likely to pull out his veto stamp.”
Key unemployment benefit
The first phase of the federal unemployment benefit expansion, which was in effect from late March 2020 through July 26, 2020, paid up to $600 weekly.
It has been by far the biggest factor in unemployment benefit payments at $6.57 billion paid to North Carolinians as of 10 a.m. Tuesday. That represents 54.7% of the $12 billion in UI benefit payments.
However, from the start of the $600 weekly federal benefit in April 2020, there were Republicans in the state legislature and Congress who believed the extra money would keep potential workers out of the job market.
In recent weeks, governors in at least 22 Republican-controlled states have withdrawn their state or are considering that step, including in Georgia, Iowa, Montana, Ohio, South Carolina and Texas.
On May 26, North Carolina’s two GOP senators — Richard Burr and Thom Tillis — sent a joint statement to Cooper in which they said that “the employment shortage caused by exorbitant federal unemployment benefits is a real and serious threat to North Carolina’s recovery.”
“The governor should immediately end expanded federal unemployment insurance and focus on incentives to encourage more people to return to the workforce, as nearly half of states already have,” the senators said.
On the other side of the political spectrum are Democratic legislators and liberal advocates who say the best potential solution to the perceived worker shortage is to raise the state’s minimum wage from $7.25 an hour to a living wage of between $13 and $15 an hour.
“A false narrative is being pushed that North Carolinians are lazy and don’t want to work. That’s simply not true,” Sen. Wiley Nickel, D-Wake, said Tuesday.
Burr and Tillis say employers have offered higher wages without success. They also charge that even $15 an hour wouldn’t be enough to lure back unwilling workers.