By Maggie Lee
In about five months months, Georgia has spent down its $2.5 billion unemployment trust fund. To keep making unemployment payments to Georgians, the state’s “first” call for a U.S. Treasury loan is around $1 billion.
That’s according to Georgia Commissioner of Labor Mark Butler.
“It’s a very simple process. We’ve already put in the request application,” Butler said on a press call Thursday. “I expect us to start drawing that money at any moment to help pay unemployment.”
The state’s unemployment trust fund fills up in good times with assessments paid by employers. But pandemic-driven unemployment starting in late March has driven it down to almost nothing.
Georgia is among the 18 states that have so far asked for U.S. Treasury loans to tide over unemployed folks.
Georgia last called on the feds for help with unemployment payments after the Great Recession of 2008. By 2012, the borrowing over a few years plus interest came to something near $800 million.
Georgia House Appropriations Chairman Terry England, R-Auburn, was around for those last paybacks.
He doesn’t anticipate the interest paybacks to cause any major budget stress.
A hypothetical sum of say, $20 million is a lot of money, England said. (That was roughly the interest payment one year, back during Georgia’s last borrowing.)
“But at the same time, it’s not going to be one of those things that means we can’t do something that we need to do,” he said.
The capital has to be paid back through employer assessments. The interest could be paid back from that too — or it could be paid back out of the “general fund.” That is, paid out of the regular sales and income taxes that Georgians and companies pay.
Georgia’s fund was healthy — rated above minimum standards for solvency compared to other states in a pre-COVID U.S. Department of Labor report. But, according to a 2019 compilation of state laws by by the U.S. Department of Labor, Georgia’s program is also small compared to other states. Laid-off workers are due fairly little here and aren’t eligible for payments as long as folks in most other states.
Georgia became temporarily generous earlier this year, when a state Department of Labor emergency rule extended regular unemployment eligibility to 26 weeks instead of the usual 14.
The amount of money that Georgia may need to draw from the feds for unemployment and how much it may have to pay in interest depends on a lot of things. Jobs may return quickly or slowly. Congress or CARES funds may provide some kind of state trust fund relief. Georgia may decide to pay back any interest quickly or slowly.
Policy may also come into play: like who will get unemployment and how long they can get it. And how much the state assesses employers.
Alex Camardelle, a senior policy analyst at The Georgia Budget and Policy Institute, said the state could take a “wise, fiscally responsible” revenue-raising approach to pay back the loan. That is, raise more money in some way, like raising the payroll tax.
“But history, if you’ve read it, certainly tells us that isn’t the first path forward that we take” in Georgia, Camardelle said.
That is, he pointed back to 2012, after the last recession, when Georgia was paying back its last unemployment loans.
Back then, the Georgia Legislature then passed House Bill 347, which raised the employee payroll tax a bit.
But it also removed tens of thousands thousands of Georgians from the unemployment rolls altogether by reducing the duration of the benefits from 26 weeks down to as little as 14 weeks.