By Scott Miller
smiller@scbiznews.com
Published Jan. 12, 2009

Unemployment benefits were created so businesses could shut down temporarily to save money without losing their work forces, said Otis Rawl, president and CEO of the S.C. Chamber of Commerce. 

But in an effort to reduce the cost of unemployment benefits to the state, Gov. Mark Sanford has suggested employers’ use of the system as “a tax-funded furlough” is one area to consider eliminating. Sanford wants a legislative audit of the Employment Security Commission, which administers the benefits program.

“I think there’s less than half a dozen states that even allow employer-filed claims anymore,” Sanford spokesman Joel Sawyer said. “If a plant is using unemployment as a way to provide semi-paid vacation to its employees and they’re doing that year after year after year, we have to look at whether or not those companies are taking out more than they’re putting in. It’s one of those things that should be looked at.”

Businesses fund unemployment benefits via a tax on employee wages. Currently, the state isn’t collecting enough revenue to fund benefits, which have hit $14.5 million a week as the state’s unemployment rate shot up to 8.4%. The state borrowed $146 million from the federal government to pay for benefits beyond the first of the year, and that money will be gone in March, if not before. 

House Speaker Bobby Harrell said he will request an audit of the Employment Security Commission to identify cost-saving measures. Several senators have already made the same request. A audit by the Legislative Audit Council could take several months, which means lawmakers may not consider any changes to benefits until next year’s legislative session.

In the meantime, Sawyer said Sanford is likely to continue to sign off on federal loans to make benefits payments, if needed.

The audit, meanwhile, could present a dilemma for lawmakers and the business lobby.

Businesses can’t afford a tax increase in this economy, Rawl said, but many employers, particularly manufacturers, need the unemployment system to save money when “nobody is buying their products.”

“It scares the daylights out of us,” Rawl said.

He suggested the state consider a reduction in the amount of time unemployed people can collect benefits, which currently is as long as 26 weeks. Some people “are gaming the system,” Rawl said, and collecting unemployment checks “when they could have been looking for jobs previously.”