On May 19th, Gov. Nathan Deal and State Labor Commissioner Mark Butler announced that the almost $1 billion federal loan used to help pay state unemployment insurance (UI) benefits since 2009 had been repaid. The final payment of $62,490,887.99 was sent to the U.S. Department of Labor on May 14 and the GDOL has received confirmation that the loan balance is paid. The original projected payoff date was 2016.
In 2012, the Georgia General Assembly enacted legislation designed to strengthen the state unemployment insurance trust fund and help repay the loan. The legislation 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.
“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 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.”
As of May 19th , the state had borrowed a total of $956,389,306.63. Georgia had paid $56,723,741.02 in interest. While the loan principal has been repaid, the final interest payment of approximately $2.7 million will be due and paid by September 30. The total payback will be approximately $1 billion.
The effect of the loan repayment is likely to be a reduction in FUTA taxes to be paid by Georgia employers from $105 per employee down to the normal $42 per employee for 2014. The final determination will be made shortly after November 10th. Commissioner Butler estimates that the earlier than expected repayment will save Georgia $600 million in additional federal unemployment taxes.
The state unemployment insurance trust fund has a current balance of $355,827,774.92. The state does not expect to have to borrow again, based on current economic trends.
