S.C. Gov. Nikki Haley and her advisors are staring down a major election year issue … the likelihood they will have to once again raise unemployment taxes on South Carolina businesses to pay off a $1 billion debt to the federal government.
In 2010, then-Rep. Haley and “Republican” leaders in the S.C. General Assembly imposed a massive tax hike on Palmetto State businesses in an effort to pay down this debt – which was incurred during the early years of the recession.
This fund – which once had a balance of $800 million – began experiencing problems as far back as 2001, when it first dipped below recommended reserve levels. By 2010 it had accumulated a $933 billion deficit. Of course while it was being depleted, state government bureaucracies in South Carolina were receiving more than $4 billion in “stimulus” funds – money that might as well have been flushed down the toilet.
Seriously … if the federal government truly wanted to “stimulate” the economy (as opposed to bailing out bureaucracies) why didn’t it just forgive this loan?
Anyway … Haley’s administration sought to soften the blow on some businesses by forcing South Carolina taxpayers to pick up $146 million of the tab. But now they are having to raise the tax again to meet repayment deadlines.
Earlier this month, Haley boasted that her Department of Employment and Workforce (SCDEW) had paid
“an additional $75 million towards the nearly $1 billion federal unemployment loan,” adding that the state was “on a path” to repay the balance by 2015.
Of course that “path” involves coming up with another $450-500 million – money which is going to be taken straight out of the pockets of Palmetto State businesses and taxpayers. In fact if this debt isn’t paid back, the federal government could impose millions of dollars of fines on South Carolina – something Haley’s administration knows a little something about.
Again … it is absolutely ludicrous Washington, D.C. would spent billions bailing out totally inefficient government agencies (which are already whining again about not having enough money) while forcing businesses to pay back this money.
But that’s Washington, D.C.’s definition of a “stimulus.” And Nikki Haley’s, for that matter …
9 comments
933 million, not billion
What’s a hundred million or so between cronies, huh? BFD.
Don’t we supposedly have a $300 million plus surplus? Just throw that towards it.
Nah, then they would have to let Planned (NO More) Parenthood to co-mingle. That’s how you gets Aids.
The ‘debt’ may have been incurred in the early days of the recession when SC had to borrow money from the feds.
But, that was because SC legislators (and, those in about 34 other states – it was so widespread McClatchy ran a lengthy story) gave employment compensation tax break after tax break to businesses during the good years – aka buying business votes.
Those legislators should have been maintaining a reasonable level of employment compensation taxation during the good years for the bad years some surely had to suspect might come again – if they were the good Sunday Schoolers they claim, they would have been storing that ‘grain’ in the good years for the bad, right?
No. This debt should not be forgiven as ‘stimulus’.
People don’t learn from their mistakes unless there are consequences…you know, some of that good Republican personal responsibility stuff.
The repayment of this loan should be paid exclusively by the businesses that got the benefits of the endless tax breaks and not their and other workers. But, business never has consequences for their short sightedness and greed, particularly when it has the likes of Hugh Leatherman looking out for them.
Let us not forget that our esteemed gov’t leaders took unemployment, that was structured in the state/SCDEW to give the unemployed 6 months, in typical budget busting gov’t fashion extended unemployment to 2 years.
Now ask yourself, when you quadruple the burden originally planned for under a state agency are the cost overruns the result of “tax breaks” or poor gov’t “leadership”?
Now, I will grant that temp. labor agencies mightily abused the system/SCDEW, but again, whose fault is that?
It doesn’t just hurt business Nitrat, it hurts the average Joe looking for a job when the rates companies must pay to employ him keep going up while the actual business climate keeps getting worse.
It’s a self perpetuating cycle.
I think we’re talking about 2 or 3 different things.
What we owe from the original federal loan, the debt the post refers to, occurred before unemployment comp was extended to 2 years. This is not the story that I was hoping to find from ’09, but is close and explains that the ‘bankruptcy’ of the ESC funds had its beginnings in the ’90s:
http://www.mcclatchydc.com/2010/12/20/105585/employers-seek-to-avoid-higher.html#.UjxdXPjD-AI
“Much of the cash problems with state unemployment insurance programs stem from the recession and record numbers of people who claimed benefits after losing their jobs. But poor planning and management of state UI funds before the recession cannot be overlooked.
Traditionally, states fattened their unemployment insurance funds when the economy was strong to pay more benefits when a recession hit. But as the economy boomed in the 1990s, that “forward financing” model gave way to a “pay-as-you-go” system, in which lawmakers cut employer payroll taxes, leaving many state insurance trust funds collecting just enough money to pay benefits each year.
When the recession officially began in December 2007, only 17 states and the District of Columbia and Puerto Rico had enough UI funds to weather an economic downturn, according to Department of Labor statistics. That’s down from 30 at the start of the 2000 recession, said Andy Stetner, deputy director of the National Employment Law Project.”
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“Seriously … if the federal government truly wanted to “stimulate” the economy (as opposed to bailing out bureaucracies) why didn’t it just forgive this loan?”
Fuck that shit FITS. SC businesses needs to pay this debt since they incurred it. If the Feds want to stimulate the economy how about forgiving the massive one trillion student loan debt. BTW I paid off my student loan decades ago.
hot pic