The improving economy is helping cut what employers in Georgia and Tennessee pay per employee to fund the states' unemployment insurance programs.
Georgia announced Monday that it has repaid nearly $1 billion borrowed from the federal government to shore up the state's depleted unemployment insurance fund -- two years earlier than expected. As a result, Georgia employers will pay $63 per employee less next year in federal unemployment taxes, Georgia Labor Commissioner Mark Butler said Monday.
"By repaying the loan early, it will save our employers from having to pay approximately $600 million in additional federal unemployment taxes," Butler said.
Tennessee also borrowed from the federal government for a few months during the worst of the recession in 2010, but the Volunteer State quickly repaid the federal loan and has since build back its UI fund to more than $850 million, according to Jeff Hentschel, communications director for the Tennessee Department of Labor and Workforce Development.
Once the Tennessee trust fund gets to $900 million, the taxable wage base will be cut for each worker from from $9,000 of annual wages to $8,000 in wages. Once the fund reaches $1 billion in Tennessee, employers will be taxed for UI benefits only on the first $7,000 of wages paid each worker.
Georgia has replenished its UI fund to nearly $356 million so far, Butler said.
Georgia's unemployment insurance trust fund had a balance of $1.3 billion in December 2007 when the recession began and unemployment stood at 5.1 percent. By December 2009, however, the unemployment rate had more than doubled to 10.4 percent and the trust fund was depleted. Georgia was forced to join more than 30 other states in borrowing from the federal government to pay state benefits.
The jobless rates in Georgia and Tennessee have declined from double-digit rates during the recession to only 6.3 percent last month in Tennessee and 7 percent last month in Georgia.
"Emerging from the Great Recession, a top priority of my administration has been putting Georgians back to work, and this news proves we are making great strides," Georgia Gov. Nathan Deal said in a statement Monday. "Georgia's ability to pay off its unemployment trust fund loan two years early is a testament to the determination of Georgia employers, the Georgia Department of Labor and our state's General Assembly."
Two years ago, the Georgia Legislature increased the amount of base wages used to calculate employer UI taxes from $8,500 to $9,500. It reduced the maximum period a person can receive benefits from 26 weeks to a maximum of 14 to 20 weeks, based on a sliding scale tied to the state unemployment rate.
While Georgia has repaid the loan principal to the federal government, the final interest payment of $2.7 million will be due and paid by Sept. 30.
There are 14 other states that have not repaid their UI loans.
Contact Dave Flessner at firstname.lastname@example.org or at 757-6340.