The federal government has approved Georgia’s request for a loan to replenish the state’s unemployment trust fund as the state continues to compensate millions of workers for lost wages.
According to officials, the U.S. Department of Treasury has authorized an $85 million loan for August as Georgia’s unemployment trust fund balance dropped to $385 million Tuesday.
The trust fund, which had a $2.5 billion balance March 24, could be depleted by the first week of September, officials said.
Gov. Brian Kemp last month requested three advances – one for August ($85 million), September ($585 million) and October ($430 million) – totaling $1.1 billion from U.S. Labor Secretary Eugene Scalia. Loans will be distributed to the states in monthly installments, according to federal law.
The Georgia Department of Labor (GDOL) will not access the money “until there is a documented need,” GDOL spokeswoman Kersha Cartwright said.
By the end of July, GDOL had processed nearly 1.5 million valid state unemployment claims. Unemployed Georgians can get up to $365 a week and can be compensated for up to 14 to 20 weeks, according to GDOL.
Cartwright said Wednesday since the amount of the final advance is undetermined, it is too early to tell how long it will take the state to pay back the federal loans. The ongoing COVID-19 pandemic adds another layer of uncertainty, she said.
The state faced similar circumstances during the Great Recession and borrowed $1 billion from the federal government to continue to pay benefits to 10.4 percent of the labor force that was unemployed. It took about five years to repay the loan and interest.
Interest is usually paid from the state’s general fund, and payroll taxes will most likely increase, potentially hurting workers and employers, Greg George, director of the Center for Economic Analysis at Middle Georgia State University, told The Center Square.
“When the state has to borrow money to supplement that fund now, that’s probably general fund spending,” George said. “So, it’s just a way of spreading the pain to the broader taxpayer base.”
