SC's unemployment trust fund going broke

By: Michelle Carolla | SCNOW
Published: September 26, 2008

South Carolina's high unemployment rate reached its highest in 15 years. That rate means big problems for everyone in the state. The state's unemployment trust fund is almost broke.

By December, South Carolina's Unemployment Commission will be out of money. A combination of the economy, the crashing housing market and years of industry jobs leaving the state led to the depletion of the fund.

Executive Director of the South Carolina Unemployment Securities Commission, Ted Halley said, "I would hope things would get better and we would collect more taxes from employees to replenish that fund. If we don't we'll have to increase the employee taxes that employers pay."

The taxable wage rate in South Carolina, which is the amount employers pay on each employee, hasn't changed since 2001. At that time, the fund held more than 800 million dollars. Since then, a continual decrease in jobs and now the crashing economy put the fund nearly at zero.

Halley said this is worst economic crisis he's seen in the state in his 36 years at the commission and he doesn't see a fix anytime soon. He said it depends on the economy turning around.

"I'll be honest with you, I don't foresee it,” said Halley. “With the housing industry, with the continuous closings in the manufacturing industry, I don't see the light at the end of the tunnel."

Halley said the state will have to borrow money from the federal government and it must be paid back. However, borrowing money automatically eliminates the federal tax credit employers receive. That translates to their paying double the taxes they're paying now.

Halley said borrowing money is a band-aid fix and the taxable wage should have been increased years ago.

Halley stressed that people who receive unemployment benefits will continue to get their checks, that's why they must borrow the money. However, the last thing already struggling businesses need is more taxes. He said the commission is working on legislation that will hopefully pass next year.