Georgia has paid off a $1 billion federal loan used to help pay state unemployment insurance benefits during the Great Recession.
Last week, state officials sent the final payment of nearly $62.5 million to the U.S. Department of Labor to pay off the loan two years early, a press release said.
“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,” Gov. Nathan Deal said. “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. Working together, we have accomplished much, and I remain committed to keeping Georgia the premier state in the nation for business.”
In December of 2007, with the unemployment rate at 5.1 percent, Georgia’s unemployment insurance trust fund had a balance of $1.3 billion. But two years later, the unemployment rate had more than doubled to 10.4 percent and the trust fund was depleted. Georgia, along with 30 other states, borrowed from the federal government to continue the benefits. According to the release, the $956.4 million in interest has paid, as well as $56.7 million in interest. The state is scheduled to pay the final interest payment of $2.7 million by Sept. 30.
Officials noted that the state has paid $3.9 billion in state unemployment insurance benefits fromt he time of the loan through March 2014.
Legislative action in 2012 helped repay the loan, officials said, explaining that legislation increased the amount of base wages used to calculate employer UI taxes from $8,500 to $9,500 and reduced the maximum period a person can receive benefits from 26 weeks to 14 to 20 weeks on a sliding scale tied to the unemployment rate.
“Georgia has repaid the federal government two years earlier than expected and the bulk of the credit goes to Georgia employers who pay the unemployment insurance taxes and have put more than 175,000 Georgians back to work,” said Labor Commissioner Mark Butler. “I want to thank Gov. Deal and the General Assembly for their assistance in making necessary changes to the unemployment laws, which, along with the GDOL’s efforts to combat fraud and put Georgians back to work, have greatly helped repay the loan early.”
Accepting the loan meant that federal unemployment taxes rose, so Butler noted that the taxes will now go down.
“By repaying the loan early, it will save our employers from having to pay approximately $600 million in additional federal unemployment taxes,” Butler said. “That money can now be used to create jobs and grow our state’s economy. 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.”
The state unemployment insurance trust fund has a current balance of $355,827,774.92, the release added.
As of Friday, 14 other states have not yet repaid their federal unemployment loans.