RALEIGH, N.C. (AP) — Republican leaders tugged thousands of jobless North Carolina residents into their budget-cutting goal Wednesday with a plan that forestalls a potential state government shutdown and guarantees slashed spending in return for extending unemployment benefits.
Democratic Gov. Beverly Perdue called the linkage "extortion."
House Speaker Thom Tillis, R-Mecklenburg, and Senate leader Phil Berger, R-Rockingham, said lawmakers will vote to change a formula that allows federal funds to continue flowing to the long-term unemployed. Otherwise, about 37,000 jobless workers who thought they had up to an additional 20 weeks of benefits will lose unemployment checks on Saturday.
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None of the money comes from North Carolina funds and extending the benefits would not add to the state unemployment trust fund's $2.6 billion debt, the state Employment Security Commission said.
But continued unemployment checks depend on Perdue accepting language that erases the chances budget talks will grind to a halt without a new spending plan by July. In the absence of a new spending plan, state government would continue operating for a year at 13 percent below the level Perdue proposed in February, the GOP-backed legislation said.
Tillis and Berger said they connected the two issues because a state budget that was both smaller and wasn't at risk of the interruption that businesses hate would encourage employment growth.
"They're related because we have got to create sound fiscal footing for this state to get back to job creation," Tillis said. "That happens by getting a budget out there, getting certainty out there, getting the tax reform provisions that we will propose in this budget out there, and that's why we think the two are intrinsically linked."
The measure tentatively passed the Senate 29-19 Wednesday over several efforts by Democrats to separate the jobless benefits from the backup budget cuts. A final Senate vote and House approval would have to come Thursday before forcing Perdue to veto or approve the measure before Saturday.
"It sounds like extortion to me," Perdue said in an interview. "They were elected to lead this state and to make tough decisions about the expenditures of North Carolina, not to give up in early April and walk away."
North Carolina is one of about three dozen states to have the extended benefits program, which was created as a way to lessen the pain of the massive job losses that came with the start of the recession in December 2007. South Carolina and 13 other states have passed legislation to revise their formula and keep the extended benefits flowing, the ESC said.
Republicans said they also wanted to avoid the kind of budget-cutting drama that gripped Washington last week ahead of a threatened federal government shutdown.
"What we're trying to do is plan ahead and make sure that we don't face the kind of brinksmanship that we're seeing at the federal level," Berger said. "We're trying to plan ahead."
The U.S. Labor Department notified North Carolina officials April 1 that the extended benefits program has to stop paying out by Saturday because the state's recent three-month average unemployment rate had improved from 2010 and 2009. News reports described the cutoff April 5. House Democrats introduced legislation fixing the formula the same day.
Berger complained the employment commission advised legislative leaders of the problem by letter Friday afternoon. Constituents started contacting lawmakers this week complaining that they faced the loss of their unemployment checks, Berger said.
Copyright 2011 The Associated Press.
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