Money for benefits expected to run out by Jan. 1 unless Sanford requests federal aid

COLUMBIA — By Jan. 1, there won't be enough money to pay unemployment benefits to about 70,000 South Carolinians, the state Employment Security Commission said Tuesday.

The shortage in funds could be covered almost instantly if Gov. Mark Sanford signs a request for a $146 million line of credit from the U.S. Treasury, said Ted Halley, the agency's executive director.

As soon as the governor signs the loan application, the money would electronically be deposited in the agency's account, Halley said.

The governor is not against seeking the federal money, but he isn't signing anything until the agency shares unemployment data with the state Department of Commerce and also agrees to a performance audit, said the governor's spokesman, Joel Sawyer.

"We very much want to request the loan," Sawyer said.

South Carolina's unemployment rate of 8.4 percent is the third highest in the country, almost two percentage points higher than the 6.7 percent national average. The state's jobless rate also is its highest in 25 years.

Over the last two weeks, Halley's agency

has been paying $14.5 million in weekly benefits to about 70,000 claimants.

That's about twice as much money in weekly benefits as a year ago, the agency said.

The state Unemployment Insurance Trust Fund, which is funded by taxes from the state's employers, has a balance of $8 million, Halley said.

Although the state is legally required to pay jobless benefits, Sanford has been reluctant to seek the federal loan.

The agency is working on getting the Commerce Department what it needs, Halley said. And he's agreeable to an audit, providing that it's conducted by the federal Department of Labor.

Halley said 99.5 percent of the funds the agency disperses come from federal coffers, so a federal agency should do the audit.

The governor wants a performance audit "to show how things are run and what could be done more efficiently," Sawyer said, adding that the agency could be evaluated by the state-run Legislative Audit Council.

The governor, though, is being urged to go ahead and sign off on the loan, which will cover jobless benefits for the first three months of 2009.

"From our standpoint, it's a bad public relations issue for our businesses," Otis Rawl, president of S.C. Chamber of Commerce, said Tuesday. "We believe he (Sanford) should request the money, but also look at how we could reform the system."

Rawl also said there needs to be a better way of matching people out of work with available jobs. Currently, there are about 58,000 job openings in South Carolina, Rawl said.

Halley estimates 65,000 to 70,000 people receive unemployment benefits.

On Monday, three of the Legislature's top leaders called on Sanford to OK the loan.

"It is inconceivable that Governor Sanford hasn't already made this request of the federal government, and it would be tragic if he allows jobless benefits to run out, particularly at this time of year," House Speaker Bobby Harrell, R-Charleston, said in a statement.

The statement also included criticism from Senate President Pro Tem Glenn McConnell, R-Charleston.

Another top leader, Sen. Hugh Leatherman, R-Florence, criticized the Republican governor. Leatherman is chairman of the Senate Finance Committee.

Noelle Phillips of The State contributed to the report.