Governor wants reforms in unemployment

By Mark Sanford

You may have read recently about the dust-up over state unemployment benefits, and I thought it was worth taking a minute to let you know why we're making noise about this issue, and why it's important you do the same.

In simplest form, our state is running out of money to pay unemployment benefits, and our office has been drawn into the debate because it's up to us to request a band-aid loan of sorts so that these checks can continue being issued.

Right now, there's a lot of finger-pointing going on about who is ultimately responsible for the situation we find ourselves in. According to the Employment Security Commission -- the agency that administers unemployment benefits -- this is a problem many years in the making that they have briefed legislative leaders about without any action being taken.

Regardless of what the legislative branch did or didn't do, it would be a mistake not to ask questions about this federal loan -- though the easiest thing to do would be to keep my head down and simply ask for the loan.

Here are my reservations:

A loan without reforming our unemployment-benefits system will mean one thing down the road -- a tax increase on businesses. What's already being contemplated would mean roughly doubling the tax employers pay for unemployment insurance. Doubling this tax from the current $300 million will mean a less competitive business climate -- and by extension higher unemployment and less economic opportunity.

According to the nonpartisan Tax Foundation, our state is roughly in the middle of the pack on our business tax climate, except when it comes to unemployment taxes -- where we rank ninth-highest in the country. Given the economic times, we don't think it makes sense to pass this cost on to businesses and those they employ.

That's why we're making somewhat of a fuss with the Employment Security Commission before applying for a loan. This is ultimately about protecting taxpayers -- and the unemployed -- by making sure that only people who are entitled to these benefits are receiving them.

So we have asked for two things before we sign off on the loan.

One, we're calling for an independent audit of the commission. Independent is the key word, because an audit by the state Budget and Control Board would be tantamount to asking a fox to guard the henhouse. This is the same group that gave a 20-year, no-bid contract for the state's insurance work to a former legislator and his family.

Since we began to highlight this issue, a number of former employees of the Employment Security Commission have raised issues with us about the operations of the agency.

For example, in order to be eligible for benefits a person needs to be "actively seeking employment." We've been told that some interpret that to mean making just one phone call a week. It seems that "actively seeking employment" should require more than one five-minute phone call in a 40-hour work week.

We've also been told that some companies are essentially taking advantage of the system, using unemployment benefits as a sort of taxpayer-funded furlough. These are the things an audit could uncover, and in the process help avert a tax increase.

Two, we're asking for better information sharing from the commission. It has refused repeated requests from our Department of Commerce and the business community to provide area-specific data about the state's unemployed. It can tell us how many people are unemployed but it can't tell us where they are and why. Other states have this data in an easily accessible format so that their economic-development efforts can be better targeted. If we want to maximize the number of people employed in South Carolina, we need the same tools other states have.

THE WRITER IS THE GOVERNOR OF SOUTH CAROLINA.