ATLANTA, GEORGIA – Labor Commissioner Mark Butler is calling on lawmakers to act to fix a state fund for unemployment insurance that is broke and in debt to the federal government. He blames former democrat Governor Roy Barnes despite the fact that several republican administrations continued Barnes’ policies for years after he left office.
Georgia depleted its unemployment trust fund in 2009 shortly after the beginning of the recent recession and since then the state has borrowed and currently owes more than $700 million to the federal government to cover unemployment benefits for tens of thousands of out of work Georgians.
Butler blames Barnes and past democrat controlled legislatures. In 1999, Georgia had a $2 billion trust fund. Then lawmakers suspended payroll taxes that funded unemployment insurance for most state employers. The fund dipped to $703 million by late 2003. Automatic measures should have kicked in to replenish the fund by raising the state payroll tax but were blocked by the legislature at the time.
Butler’s spin is a little different, “…the “trust” was taken out of the trust fund. In an attempt to curry favor with Georgia businesses, Gov. Roy Barnes declared a “tax holiday” before Barnes’ failed 2002 re-election campaign. Businesses stopped paying into the trust fund.”
While the initial changes to the fund came under Barnes, there is plenty of blame to go around as subsequent legislatures, including the current leadership, have failed to address the mounting debt.
The result is that companies are paying higher federal unemployment insurance taxes as long as Georgia is in debt to Washington.
According to Butler, “As long as our loan remains outstanding, both federal and state fees will increase. Last year, businesses paid $42 per employee, per year for federal unemployment insurance. In January, the federal government increased that annual fee by $21, raising the total cost to $63 per employee. An additional $21 will be added each year until employers are paying $105 per employee in federal charges. In addition to these federal fees, state unemployment premiums will double if we do not take legislative action this year.”
The State Senate has passed a bill that will limit those on the dole to between 12 and 20 weeks of unemployment benefits. Currently they get 26 weeks.
It is unclear if the Senate’s action is constitutional since it is a funding bill, which legally must originate in the State House. Butler is urging a workaround, “Constitutional questions could be eliminated if the Senate amends an existing House Bill to include comprehensive solutions, pay down our debt, pay the interest and take our trust fund back to solvency. With the willingness shown by Senate leadership and interested members of both House and Senate, I know we can accomplish this.”