Georgia will consider cutting back weekly unemployment checks by $30 next year to help pay off a federal loan the state assumed to maintain benefits for hundreds of thousands of jobless workers.
But the move is being criticized by advocates of out-of-work Georgians, who say Labor Commissioner Mark Butler is favoring businesses over workers
In a meeting with some of the legislature's House and Senate leadership Thursday, Butler proposed cutting weekly jobless benefits for top earners to $300 from $330. Any changes would have to approved by state lawmakers and Gov. Nathan Deal. If a benefits cut is approved, it would not impact workers now drawing checks but those who make new claims.
Advocates for workers would rather the state ask businesses to pay more into the state's unemployment insurance fund.
Georgia owes the federal government $721 million in loans it took out to maintain its unemployment benefit fund. There are 487,471 Georgians drawing unemployment checks, according to a state report released Thursday. The Great Recession has created a pool of long-term jobless -- about 256,900 in Georgia -- who have been out of work at least 27 weeks.
Butler wrote a check for $21.4 million on Oct. 1 but said changes are necessary to help Georgia pay off the loan. Cutting benefits would allow Georgia to settle the debt in 3-5 years, he said.
Each year that Georgia holds a balance on the loan, the amount of federal unemployment tax on Georgia businesses will go up, Butler said.
"We are under the gun to get this paid back," he said.
The news came on the same day the state labor department released September unemployment figures. The number of jobless rose to 10.3, the highest in Georgia since January.
Georgia makes weekly payments to workers, laid off by no fault of their own, from its unemployment insurance reserve, normally funded by employer taxes. But in 2000, amid low unemployment, the General Assembly declared a "tax holiday, " which lasted through 2003, absolving most employers from paying the tax.
The reserve fund fell from $2 billion to $703 million in late 2003. Although employers were supposed to refill the fund once the holiday expired, legislators repeatedly granted them additional tax breaks.
"So, given that history, what sense does it make to take away the one tool -- [consumer spending] -- to help stimulate the economy," said Elizabeth Appley, a lawyer who represents nonprofits that focus on working families. "How do you cut that and make us more competitive? We're already scraping the bottom."
The fund's balance is now $228.1 million. Employers now pay, on average, $187 per employee per year.
Butler said he's weighing other options, including reducing the number of weeks that Georgians can receive benefits from 26 to 25 or lower.
Critics of the plan say unemployment benefits should be untouched.
"This is not a time to hurt those who have been laid off at no fault of their own," said Clare Ritchie, a senior policy analyst with the nonpartisan Georgia Budget and Policy Institute. "A solution to solvency should not include cuts in benefits to the unemployed."
Analysts are reviewing additional options, said Butler, but he would not elaborate on what they are. Butler said raising taxes on businesses is not feasible. He said that would place further stress on Georgia's companies that already have had to lay off thousands.
"If you put all the burden on the businesses, that's employees that they cannot hire," he said. "We have to put people back to work."
Butler said the federal government will require employers to pay an additional $21 per worker next year in federal taxes as part of a deal last December to extend federal insurance benefits. That amount will double the following year if the loan Georgia took out isn't repaid.
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