Before March, Georgia looked to have one of the more solvent unemployment insurance trust funds.
That is no longer true, as Georgia is receiving an $85
million loan to replenish its unemployment trust fund, which is quickly running
out of cash as the state’s insured unemployment rate remains elevated.
The funds are the first installment of a $1.1 billion request made to the U.S. Department of Treasury by Governor Kemp, as reported by The Center Square.
Figures from the most recent Unemployment Insurance Weekly Claims report published by the U.S. Department of Labor shows that 633,988 people in Georgia were receiving unemployment insurance benefits as of July 25, 2020, in contrast to the 25,618 people who received them a year ago.
As of the end of July, the state’s insured unemployment rate stood at 14.4%.
The Georgia Department of Labor announced that as of July 28, 2020, the trust fund balance was $585,483,621, down $1.962 billion, or 77 percent, from the March 24 balance of $2,547,476,454.
Last month, Governor Kemp as the U.S. Department of Treasury to loan Georgia $85 million in August, $585 million in September, and $430 million in October. The current loan is the first installment related to that request.
States that receive loans are expected to repay that money to the U.S. Treasury by either increasing state’s payroll tax on employers or from general funds.
Interest is usually paid from the state’s general fund, and payroll taxes will most likely increase, potentially hurting workers and employers, Greg Georgia, director of the Center for Economic Analysis at Middle Georgia State University, told The Center Square.
"When the state has to borrow money to supplement that fund now, that's probably general fund spending," George said. "So, it's just a way of spreading the pain to the broader taxpayer base."
In June, the Tax Foundation conducted an analysis of the solvency of states’ unemployment insurance trust funds and noted that Georgia ranked 21st in its solvency level at 1.25. Any state with a solvency level of 1.0 or greater was deemed to have unemployment insurance sufficient to weather a recession.
California ranked worse at number 50 with a solvency level of 0.21, while Vermont controlled the most solvent of the state trust funds with a solvency rank of 2.53.
Despite the high number of claims being paid weekly by the Georgia Department of Labor, there are still accusations that the department has failed to pay all claims dating back to the middle of March.
The state says it has paid benefits on 92% of valid claims since March.
“As additional claims are
being filed, we have been able to maintain an
impressive ratio of eligible claims filed to payouts,” said Labor
Commissioner Mark Butler. “Record breaking payout rates represent a
new standard for this department as we strive to better serve
Georgians.”
