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Major Change Possible for Georgia Unemployment Benefits Program

Mike Klein

Georgia appears prepared to make significant changes to its unemployment benefits program, changes that could have an impact on Georgians without jobs.  Options under review at the State Capitol include a waiting period that would delay the first check, fewer total state benefit weeks and reducing the maximum weekly benefit dollars.

Some combination of these three ideas or others is possible.  Governor Nathan Deal’s chief spokesman Brian Robinson said, “The governor is looking at several options that we’ll discuss with legislators once the 2012 session begins.”  Lawmakers return in January but the real work to get key issues ready for the General Assembly has been underway for months.

Georgia’s “official” unemployment rate is 10.2 percent, well above the 8.6 percent national rate reported for November by the U.S. Department of Labor.  “Official” does not try to estimate those who became so discouraged that they quit looking for work.

Georgia has written $777 million in state-funded benefit checks this year.  “We have to find a way to control the outflow,” said state labor department commissioner Mark Butler.  “What we are bringing in is barely enough to meet the demands we have to pay out.”  Federal benefits paid out are $1.16 billion.  Three options under review include:

** First, implement a “Waiting Week” before the first state paid benefit to save an estimated $35 million per year.  The current average recipient receives benefits for about 14 weeks.

** Second, reduce the number of state paid unemployment benefit weeks from 26 weeks now to between 20-to-26 weeks to save $163 million per year.

** Third, reduce the maximum weekly benefit from $330 to $300 per week to save $58 million. The current average benefit check is $259.

Georgia Labor Commissioner Mark Butler

Butler described these options as “like coming up with the best (of the) worst solutions” but the first-year state labor commissioner also acknowledged, “Those are the best ideas.”

Unemployment compensation is a state and federal shared responsibility.  States manage their programs and assume the benefit costs for an initial period — in Georgia that is currently 26 weeks — before federal funds pay additional benefits for up to 99 total weeks.  Thirty-five states including Georgia quickly depleted available state funds during the recession.  Georgia began to borrow federal funds in December 2009.

Federal loan repayment is a different challenge.  The $721 million that Georgia owes must be repaid with federal unemployment insurance taxes levied on employers statewide.  This year the federal tax amount was an annual $21 per employee; next year the cost to employers will be $42 per employee and it will go up another $21 every year until Georgia’s loan is repaid.

“I’m going to be as aggressive as possible paying this back so we can reduce the amount of the increase from the feds,” Butler said.  “The longer you (have outstanding loans) the higher the federal tax gets” on statewide employers.

An already compound problem became more complex this year when President Barack Obama’s administration sent conflicting signals about waiving state interest payments.  The White House budget submitted to Congress in February contained such a proposal, but then the administration backed away from the idea and states began to pay interest this fall.

Georgia repaid $27 million in October: $6 million principal and $21 million for interest.  Butler said the interest payment was financed with $15 million in redirected Medicaid funds and the remainder came from the labor department budget.  Employer dollars financed the $6 million.

One year ago Texas faced the long-term prospect of a much larger repayment, $2.1 billion in principal plus interest.  The Lone Star state sold bonds, repaid the debt owed to Washington and replenished the Texas state account.  Texas estimated that it avoided $110 million in federal interest by financing the debt with state bonds.  Last month the Illinois General Assembly approved a similar bonds sale.

Georgia bonds are not on Butler’s short list.  DOL conferred with Attorney General Sam Olens’ office.  “The structure they showed us is extremely complicated almost to the point where it would be very hard to pull it off” without a constitutional amendment, Butler said.  The federal loan interest rate is about 4 percent; state bonds could be sold at a considerably lower rate.

Anything that changes will require General Assembly approval because nearly everything that governs unemployment benefits is contained within law.  The option – doing nothing – would make this situation much worse next year and require new borrowing.  “We cannot get out of this by putting this onto business,” Butler said.  “You cannot tax your way out of this.”

Georgia Employment Data:

Georgia Unemployment Rate:  10.2%

National Unemployment Rate:   8.6%

October 2010 Long-Term Unemployed:  240,600

October 2011 Long-Term Unemployed:  259,300

October 2010 Statewide Payroll Jobs:  3,851,400

October 2011 Statewide Payroll Jobs:  3,818,800

October 2010 Initial Claims:  57,494

October 2011 Initial Claims:  55,865

2011 State First-Time Payments:  223,319 People

2011 Federal First-Time Payments:  460,149 People

2011 State Payment Dollars:  $777 Million

2011 Federal Payment Dollars: $1.16 Billion

(Data Source: Georgia Department of Labor)

(Mike Klein is Editor at the Georgia Public Policy Foundation)

December 6, 2011 Posted by | Uncategorized | , , , , | Leave a comment

Georgia Tax Collections Solidly Up But Jobs Remain Elusive For Many

Mike Klein

Georgia state tax collections are solidly on the upswing but other economic data indicates jobs are still being lost and the state’s economy is slow putting people back to work.

Governor Nathan Deal’s office reported January revenue increased $117 million compared to last year.  This is Georgia’s eighth straight positive report of year-to-year improved revenue.  The fiscal year that began last July is up $705 million or 8.1%.  Deal said revenue gains will be largely devoted to education priorities.

January’s total year-to-year revenue is $9.4 billion compared to $8.7 billion one year ago.  But year-to-year state tax collections remain lower than three of four previous fiscal years:   $9.85 billion in January 2009, $10.48 billion in January 2008 and $10.18 billion in January 2007.

The largest increase last month came from $94 million more paid in individual income taxes even though statewide unemployment remains high at 10.2%, well above the 9% national average.  Also, the U.S. Department of Labor recently reported 10,335 Georgians filed initial unemployment claims during the week that ended January 22.  That was the highest weekly total reported by any state.

Georgia Department of Labor officials have said statewide re-employment will improve fastest in education, health care, leisure, hospitality and other business services.  The slowest return-to-work is expected in construction, financial activities, retail trade and manufacturing.

Georgia legislators are working to plug an estimated $2 billion gap in the next budget caused in part because the state will lose $1.2 billion in current fiscal year federal stimulus funding.

Mike Klein is Editor at the Georgia Public Policy Foundation.

February 9, 2011 Posted by | Uncategorized | , , , , | Leave a comment

Long-Term Unemployed Are Now Majority of Jobless Georgians

Mike Klein

Georgia’s new unemployment data proves the state’s weak economic recovery has missed nearly half a million people who worked and claim they want to work again.  The Atlanta metro area’s 10.2% jobless rate announced Wednesday is identical to the state percentage, and both are nearly one full percentage point higher than the 9.4% national percentage.

The most significant trend in Georgia Department of Labor data is continuous growth in the percentage of long-term unemployed, defined as persons without work more than 26 weeks.  They now represent 54% of the state’s jobless population, up from less than 35% one year ago.

Georgia reported 76,635 initial claims for unemployment insurance in December and 478,833 total unemployed.  The number of long-term unemployed rose dramatically from 168,200 in December 2009 to more than 259,000 twelve months later.

The national recession that began about three years ago also caused Georgia to burn through its entire $1.2 billion unemployment insurance trust fund.  Thirty one states including Georgia now borrow federal dollars to write their weekly unemployment checks.

A report posted online this week by the National Conference of State Legislatures said 31 states have borrowed $42.2 billion since September 2006.   NCSL said Georgia has borrowed $588.5 million since December 2009.  Principal and interest will be owed back to Washington.

Mike Klein is Editor at the Georgia Public Policy Foundation.

January 27, 2011 Posted by | Uncategorized | , , , , | Leave a comment

Monday Live Blog: Georgia Jobs Conference

Final Version: 4:00 pm

The Georgia Department of Human Resources will utilize federal government stimulus funds to help Georgia employers fully fund new teen-aged hires during the June and July summer recess.  The announcement was made Monday by Human Resources commissioner B.J. Walker during the Georgia Department of Labor’s Georgia Jobs Summit at the Georgia Tech Hotel and Conference Center.

Labor commissioner Michael Thurmond announced his department will create Georgia Jump Start, a new focus on how to re-deploy existing resources without requiring legislative action.  The plan will be shared with Governor Sonny Perdue, Lt. Governor Casey Cagle, and the General Assembly.  Perdue and Cagle did not attend the conference. GDOL executives also pledged more help to small business.  Panelists repeatedly said strengthening Georgia education remains the key to economic success. Continue reading

January 17, 2010 Posted by | Uncategorized | , , , , , , , , | Leave a comment