Georgia gets federal loan for jobless benefits

In an unprecedented move, Georgia will borrow $70 million from the federal government by year’s end in order to pay jobless benefits, Labor Commissioner Michael Thurmond said Thursday.

The loan – which has already been approved -- will help the state cut unemployment checks starting next week and continuing as long as needed, he said. Without it the state's unemployment benefits trust fund would be depleted, according to Thurmond.

To rebuild that fund, the tax used to pay benefits will be raised “a modest amount” on about 15 percent of the state’s employers, Thurmond said.

A company’s payments are calculated using its jobs history, size and other factors.

“The interest-free federal loan allows us to avoid sharp increase across the board,” Thurmond said. “We will not impose significant increases on employers.”

States can take such loans without interest until 2011, thanks to a provision in this year’s stimulus package. Even so, paying back the principal “will be challenging,” Thurmond said.

In the 74-year history of the program, Georgia had never asked for a federal loan.

But during two years of painful layoffs, the state has paid $2.6 billion in benefits, draining the unemployment fund down to $25 million – less than one week’s worth of checks.

There was no choice, Thurmond said, adding: “You are obligated to pay every claim that is eligible.”

The fund would have lasted longer had Thurmond not trimmed the taxes on employers three times. The last cut came in early 2007. Although the recession came less than a year later, Thurmond said he did not regret the decision to cut.

“Would I like to have another $250 million today? Yes,” Thurmond said. “But I think that maintaining a pro-business environment is a good thing. At the time, I think we did the right thing.”

Two dozen other states have asked for a loan, and eight have already borrowed more than $1 billion. Georgia is the last of the 10 largest states to ask for a loan, Thurmond said.

The state now has nearly 500,000 unemployed. About 269,000 receive either state jobless benefits or have exhausted those benefits and are getting money via federal extensions.

While the pace of layoffs is not as frantic as a year ago, the steady flow of job cuts has continued. More than 1 million people have filed unemployment claims for the first time in the past two years, including 44,856 last month, according to the Labor Department.

November’s unemployment rate for Georgia was 10.2 percent, up from a revised 10.1 percent in October, Thurmond announced Thursday.

The rate in Georgia has hardly moved of late, after cresting during the summer at 10.3 percent. The leveling may reflect jobless people who have simply stopped looking for work, according to the U.S. Bureau of Labor Statistics.

Thurmond on Thursday announced he will invite business executives, public officials, community leaders and academics to a “jobs summit” on Jan. 18 at Georgia Tech.