Georgia Could Benefit From Obama Unemployment Trust Fund Proposals
Mike Klein
President Barack Obama’s budget released Monday includes short-term suspension of loan interest payments and a later increase in business taxes to take pressure off under-funded unemployment insurance trust funds. Thirty states including Georgia have insolvent trust funds.
The Obama proposal is a short-and-long-term strategy. Suspension of interest payments for two years means states would receive a “Due Later” pass on hundreds of millions of dollars in interest payments due in September. An increase in the taxable wage base starting in 2014 would enable Georgia and other states to repay federal loans and rebuild state reserves.
Suspension of the interest payment would save Georgia about $18 million when its first interest payment on $634 million in current loans. Labor commissioner Mark Butler has said the Georgia loan total could reach $820 million. Thirty states have $42.5 billion in outstanding loans.
Governor Nathan Deal’s office issued a statement that said, “The Governor supports giving relief to the states on the interest payments on the money borrowed to pay unemployment.”
Businesses currently pay unemployment taxes on the first $8,500 of an employee’s wages. That would increase to $15,000 in fiscal 2014 and the level would be indexed to inflation in later years. The net effect would be a significant increase going into state unemployment trust fund accounts.
The White House noted this would be the first significant change in nearly 30 years. It said, “In 2104 the taxable wage base will be nearly the same in real terms as it was in 1982, when President (Ronald) Reagan signed into law the last legislation increasing the wage base.”
White House proposals were first reported in news stories here and elsewhere last week. Complete details are on page 111 of the White House budget document. CLICK HERE.
Mike Klein Online posted two articles last week with extensive background on unemployment insurance trust funds.
Mike Klein is Editor at the Georgia Public Policy Foundation.
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