State Government

Higher Unemployment Insurance Taxes Coming

By Steve Tuttle

About seven of every 10 employers in North Carolina will become liable for higher unemployment insurance taxes next month with the end of an automatic 50 percent discount on those rates, according to the Employment Security Commission. The discount, enacted by the 1993 General Assembly, contains a provision specifying that the lower rate will be suspended any time the level in the state’s Unemployment Insurance Trust Fund drops below $800 million, which occurred in August.

ESC officials said they calculate that, as a result of the suspension of the discount, 122,535 companies in the state will have a higher unemployment insurance tax rate in 2003, 8,012 companies will have a lower rate and 46,001 companies will have the same rate.

On top of losing the discount, many companies will see their unemployment insurance taxes pushed up even further because of layoffs they made in the past year. Layoffs impact a company’s so-called experience rating; i.e., companies that had experienced a lot of layoffs are producing a greater strain on the trust fund and thus are liable for higher payments into the trust fund.

Although the discount ends Jan. 1 at the same time the higher experience ratings are applied, companies will not have to pay the larger unemployment insurance tax bills until the end of the first quarter. Those checks should be in the mail to the state on April 1, the ESC said.

State revenues climb: The state’s revenue picture is brightening somewhat, with total tax and non-tax revenues for the first quarter of the fiscal year running $242.8 million greater than the comparable year-ago period, according to data from the State Controller’s Office.

A good bit of that is coming from corporate income taxes, which totaled $233.1 million in the July-September period compared to $35.7 million in the same three months last fiscal year. Higher sales taxes also are contributing to the growing revenues, with $1,067 billion collected in the first quarter of this fiscal year compared to $880 million in the year-ago period.

However, the weak job market continues to cloud the state’s revenue picture, which can be seen in individual income tax collections. For the quarter, the state expected to collect $1.855 billion but actually realized $1.842 billion in individual income taxes. Total tax collections for the quarter from all sources amounted to $3.345.2 billion, about $376 million over the budget target of $2.969.5 billion.

However, revenue from non-tax sources, including Treasurer’s investments and the state’s allotment from federal grants, were below target, leaving total receipts for the quarter at $3.518.4 billion compared to a budget of $3.331.4 billion. See chart, page 79.

On the other hand, expenditures also are below last year, according to the State Controller’s Office. During the first quarter actual General Fund expenditures totaled $2.782.7 billion, which compares to $2.898.8 billion in the comparable year-ago period, a decline in spending of about $116 million or about 4 percent.

Spending on education is about the only area of the budget seeing increased spending this fiscal year. In the first quarter the state spent $1.646 billion on education at all levels, compared to $1.603 billion in the year-ago period, a rise of 2.2 percent. By contrast, spending on health and human services program is down from $782 million in the first quarter a year ago to $671 million this year, a 14.2 percent decline.

Community Colleges Want Higher Salaries: The State Board of Community Colleges has determined that raising faculty and professional staff salaries to the national average will be its top budget priority in the year ahead and submitted funding requests that include $95.7 million in new money over the next two years to meet that goal. North Carolina Community College faculty salaries how are at 79 percent of the national average.

The board approved an expansion budget proposal that includes about $19 million in the first year of the biennium and $77 million in the second for salary increases. System President Martin Lancaster said the dollar amount attached to the request is a large one, but he emphasized it reflects the true financial requirements for the System.

Hell had no fury like a union hairstylist scorned, as the state Court of Appeals learned last month. The court was reluctantly dragged into deciding the merits of a defamation suit brought by two union hairstylists over the hiring of a non-union hairdresser to work backstage during production in Charlotte of the 1999 CBS miniseries “Shake, Rattle and Roll.”

Court Untangles Spat Between Union, Hairstylists
A three-judge panel of the court appeared a bit perplexed about how to untangle the matter. In a state famous for its right-to-work statutes, how could they properly apply the law when union members sue their own union? The panel’s Nov. 5 decision seems to, uh, split hairs.

Judges James A. Wynn Jr. and Loretta C. Biggs sided with the Make-up Artists and Hair Stylists Local 798 by concluding it didn’t defame two of its own when it castigated them in a newsletter for hiring a non-union member to work as “second hair” on the miniseries, which dramatized the life of rock pioneers Bill Haley and the Comets. Judge K. Edward Green dissented, siding with the two union members (the “first hair” and “third hair” on the production) that they had grounds to pursue a defamation action against the union for its criticism of them.

The split decision means state Supreme Court probably can look forward to at least one bad hair day next year.


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