Georgia has repaid nearly $1 billion the state borrowed from the federal government in 2009 to shore up its depleted unemployment insurance fund, Gov. Nathan Deal said today.
After raising both the taxable base and the rate charged to employers in 2012 to aid the jobless benefit program, Georgia has replenished its UI fund and sent its final $62.5 million check to Uncle Sam to repay the loan. The original projected payoff date was 2016.
"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," Deal said in a statement. "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 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.
"By repaying the loan early, it will save our employers from having to pay approximately $600 million in additional federal unemployment taxes," Georgia Labor Commission Mark Butler said. "And, now that the loan is repaid, our employers will see a reduction of $63 per employee in their federal unemployment taxes beginning in January."
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, the unemployment rate had more than doubled to 10.4 percent, the trust fund was depleted, and Georgia was forced to join more than 30 other states in borrowing from the federal government to pay state benefits.
Tennessee borrowed from the federal government for a few months during the worst of the recession, but the Volunteer State has since build back its UI fund to more than $800 million, according to Jeff Hentschel, communications director for the Tennessee Department of Labor and Workforce Development.
Georgia has replenished its UI fund to nearly $356 million, Butler said.
Georgia borrowed a total of $956.4 million from the federal government to help sustain its jobless benefits. While the loan principal has been repaid, the final interest payment of approximately $2.7 million will be due and paid by Sept. 30. The total payback will be approximately $1 billion.
Employers in states borrowing from the federal government to pay UI benefits eventually have to pay a higher rate of federal unemployment taxes (FUTA) until the debt is repaid. All of the additional federal unemployment taxes are used to repay the loan balance. States also use revenue from state unemployment insurance taxes (SUTA) to repay the loan.
There are 14 other states that have not repaid their loans.