South Carolina has begun paying off nearly $1 billion it owes the federal government for unemployment benefits. Two years ago, South Carolina had to ask for an emergency loan after its unemployment trust fund went bankrupt.
Governor Nikki Haley announced the state made its first payment on that $952 million debt last Friday.
“We are not in the borrowing mode anymore,” she told reporters in a press conference, “We are now in the paying-back mode.”
Earlier this year, the Department of Employment and Workforce changed how it charges companies for unemployment insurance. Business groups criticized the changes, pointing out many of the state’s larger manufacturers would see their premiums tripled.
The Legislature responded by using higher-than-expected tax revenue to help out businesses.
“This will put the trust fund back on the road to solvency,” Workforce Director John Finan said, adding that he hoped companies would see a reduction in rates once the state pays off its debt in 2015.
However, as a way to begin paying back the debt sooner, legislators voted to cut some jobless benefits earlier this year. Haley signed the bill in June, which cut six weeks off the jobless aid and stopped providing benefits for seasonal workers.
“You’re going to continue to see legislation that brings more accountability into the benefits system,” Haley said.
The next payment is scheduled for November. South Carolina hopes to have its unemployment debt paid off completely by 2015.
Finan said his agency will take precautions to prevent the trust fund from going bankrupt again. The Legislature has required DEW to review the system every year and make recalibrations, as needed.