INCOMPETENCE? OR THEFT?
South Carolina’s unemployment insurance (UI) trust fund has fully repaid its debt to the federal government – and racked up a whopping $280 million surplus to boot.
That’s according to the latest report from the S.C. Department of Employment and Workforce (SCDEW) – the cabinet agency which is responsible for overseeing the fund.
Is this good news? Sure … for politicians and for the government bureaucrats administering the state’s “dependency economy.”
For businesses in the Palmetto State, though, it’s a vastly different story.
Back in 2011, the UI fund incurred a whopping $933 million deficit thanks to all the jobless benefits doled out during the peak of the “Great Recession.”
To put that figure in perspective, prior to the recession hitting the fund had a positive balance of roughly $800 million.
How did state leaders deal with this $1.7 billion swing? Easy: By raising taxes on South Carolina businesses. Not only that, lawmakers targeted the businesses hardest hit during the recession – i.e. companies that “used” unemployment benefits.
Under a plan crafted by former S.C. Senator Greg Ryberg and retiring S.C. Rep. Kenny Bingham – businesses forced to lay off workers during the recession were also forced bear the brunt of replenishing the fund (shelling out as much as $1,128 per worker in some cases).
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The horror stories we’ve heard in the aftermath of this “reform” – which was endorsed by governor Nikki Haley – would blow your mind.
“We experienced a 2000 percent increase,” one business owner told us.
Not only that, SCDEW’s massive tax hike is based in part on the agency’s own overpayments – which means businesses are being taxed based on the agency’s mistakes.
“Mistakes made by SCDEW all benefit SCDEW,” one business owner said. “The agency’s ultimate big stick is if you disagree with the rate assigned – or do not receive a notice of rate change and underpay – they will assign you a noncompliance rate that may be 20 percent or higher of your total payroll.”
Unlike the Internal Revenue Service (IRS), SCDEW does not use certified mail for its time-sensitive communications – compounding headaches for owners trying to comply with the onerous new mandates (and costs).
“There is no accountability for this agency to the businesses that fund it, their notification and collection practices offer no protection to businesses,” business owner added. “If you send them something they do not know what to do with or respond to, they just ignore it.”
One source told us they believe SCDEW isn’t incompetent – it’s corrupt.
“I believe the agency intentionally uses incompetence as a mechanism to overcharge businesses,” the source said. “Further, I believe the agency purposefully, not negligently, paid out bogus benefits in 2012 and beyond as a means to increase contribution rates on thousands of small businesses whom they rightly assume will not notice the additional cost, or do not have the means to put up a fight.”
Wow. That’s obviously a seismic allegation – one we believe state lawmakers should investigate immediately.
SCDEW’s unemployment fund paid out $193 million in benefits in FY 2014-15 – while taking in $428.8 million in revenues. It was projected to pay out $207.5 million in benefits during the fiscal year ending tomorrow (June 30, 2016) – while bringing in $358.5 million.
Obviously as soon as we get an updated on the FY 2015-16 numbers, we will pass those along.
As we’ve repeatedly documented, South Carolina rolls out the red carpet for select corporations – doling out hundreds of millions of dollars in taxpayer-funded “incentives.” But local homegrown companies? They are left to fend for themselves – that is when they’re not being targeted for the next shakedown.
No wonder our state is struggling with sagging income levels, anemic labor participation and slowing economic growth.