ATLANTA — The federal government is stepping up with $1.5 billion to replenish Georgia’s depleted Unemployment Insurance Trust Fund, Gov. Brian Kemp announced Wednesday.
The money, which will come through the Coronavirus Aid, Relief and Economic Security (CARES) Act, will repay funds the state has borrowed to provide unemployment benefits to Georgians who lost their jobs during the pandemic.
“COVID-19 has brought unprecedented challenges to nearly every business - large and small - and upended the lives of millions of Georgians," Kemp said. "Through no fault of their own, thousands of people became unemployed overnight, businesses were shut down, and countless families suffered.
"Today's announcement will save Georgia employers millions of dollars in state and federal unemployment taxes, prevent significant layoffs, and save the state millions of dollars in interest payments.”
By allocating up to $1.5 billion in coronavirus relief funds to avoid raising state and federal unemployment taxes, the average Georgia employer will save about $350 per year for each employed worker.
But the state still won’t be out of the woods. With benefit payments projected to outpace tax revenue, Georgia will have to continue to borrow federal funds to pay benefits.
After the Great Recession of 2008-2009, it took three years until tax revenue outpaced benefit payments.
Unless the state raises employers’ tax rates for unemployment insurance or provides an injection of capital through another means, Georgia would have to borrow an additional $1 billion by 2023 to keep up with benefits payments, according to state Department of Labor estimates.
“Without the transfer of funds, the state will have to increase unemployment tax rates for employers between 300% and 400% to make headway on paying off the loan,” Georgia Commissioner of Labor Mark Butler said Wednesday. “This reallocation of federal funds will allow more employers across the state to focus on the growth and success of their businesses without having the additional pressure of a rising unemployment tax.”