Georgia may cut jobless benefits

Georgia may cut jobless benefits

October 26th, 2011 by Dave Flessner in Business Around the Region


$330: Maximum weekly benefit for unemployed people in Georgia, which could drop to $300 next year.

$275: Maximum weekly benefit for unemployed people in Tennessee

$721 million: Amount Georgia borrowed from the federal government to replenish its unemployment trust fund

$21: Increase Georgia employers will have to pay in federal unemployment taxes for each worker every year until the federal loan is repaid

$215.2 million: Current balance of the Georgia Unemployment Insurance Trust Fund, down from the peak of more than $1.8 billion nearly a decade ago

Sources: Georgia Department of Labor, National Employment Law Project

ROCK SPRINGS, Ga. - Georgia employers will have to pay another $21 a year for each worker, and some jobless Georgians may get $30 less in weekly jobless benefits next year to help the Peach State repay the federal government for keeping its unemployment insurance fund afloat during the recession.

Georgia Labor Commissioner Mark Butler said Tuesday the Legislature "will have to make some tough decisions in January" about how to repay more than $721 million the state borrowed from Uncle Sam. Georgia is one of 28 states that had to borrow from the federal government to keep paying jobless benefits over the past couple of years when employment shrank and the ranks of unemployed workers grew.

Such states began making interest payments to the federal government this month and next year will have to double the federal unemployment tax on employers by adding another $21 a year for each employee.

That tax will generate more than $60 million in Georgia, but Butler said the state needs also to look at cutting some benefits and shortening the length of time Georgians can draw benefits to pay back the federal loan quicker.

"If it takes a long time to pay back the federal government, this could get to be a very expensive tax," Butler said, noting that the federal tax will go up $21 more per employee every year until it is repaid. "We have to look at other ways to pay it down quicker."

Butler said he is proposing to cut benefits for some jobless workers, rather than raise the tax rate or wage base for Georgia employers during tough economic times.

For major companies like Beaulieu Carpets in Dalton, for instance, the federal tax increase in January will cost the struggling manufacturer more than $100,000 of extra costs.

State Sen. Jeff Mullis, R-Chickamauga, said the Legislature is not interested in adding any more state taxes on Georgia employers.

"We'll find another way to make it work without raising taxes because if we have to raise even more from businesses that could be too much," he said. "There's always a way to reduce something there to pay for something here."

Butler is proposing that the state reduce the maximum weekly benefits for unemployed workers from $330 to $300 and to shorten the time that workers can get state unemployment benefits from 26 weeks to 20 weeks.

Such measures could help save the state more than $180 million a year.

"Hopefully we won't have to borrow any additional money from here on out, unless we go into a double-dip recession," Butler said.

Georgia paid more than $21 million to the federal government on Oct. 1 for interest on its debt, and next year the state will have to pay an estimated $28 million interest payment.

Already in 2011, three states needing to repay federal loans -- Michigan, Missouri and South Carolina -- have cut the maximum time unemployed people may receive jobless benefits from 26 to 20 weeks.

Georgia could be one of the first states to cut the amount of the weekly benefit if the Legislature approves Butler's proposal, according to the National Employment Law Project.

"Georgia has historically underfunded its unemployment trust fund and has cut taxes on employers when times were good," said George Wentworth, a senior staff attorney at the National Employment Law Project, which advocates for employee rights.

"The way to restore this under funded system should not be on the backs of unemployed people," he said.