Georgia Gov. Brian Kemp today announced that as much as $1.5 billion in Coronavirus Relief Funds from the federal coronavirus relief act would be allocated to repay borrowing for the Georgia Unemployment Insurance Trust Fund to prevent increases in state and federal unemployment taxes.
By year’s end, the Georgia Department of Labor estimates the state Unemployment Insurance Trust Fund will have borrowed a total of $1.5 billion in response to the COVID-19 pandemic’s impact on Georgia’s labor force.
“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 for this purpose, Georgia will save the average Georgia employer approximately $350 per year for each employed worker.
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 and 2009, it took three years until tax revenue outpaced benefit payments on an annual basis.
By 2023, without raising employers’ tax rates for unemployment insurance and without a capital injection, the department of labor estimates the state could borrow another $1 billion to pay benefits.
“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,” said Georgia Department of Labor Commissioner Mark Butler. “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.”
Kemp said he is also committing up to an additional $400 million of the Coronavirus Relief Funds for the state share of matching funds for FEMA grants, Georgia National Guard expenses, continued hospital staffing augmentation, and state COVID-19 response expenses.
Kemp previously announced $113 million of federal relief funds to Georgia nursing homes, $105 million in GEERS funds to support student connectivity and education, and $371 million in direct support to local governments for COVID-19 related expenses.