As Georgians crowded unemployment offices during the economic struggles of the past several years, the state went deep into debt in order to pay them jobless benefits.
But after making some controversial benefits cuts, “tightening up” on overpayments and seeing the region’s economy and hiring pick up, the state has paid off much of what it borrowed, said Labor Commissioner Mark Butler.
“We are ahead of schedule,” he said. “We will have it paid off in the fall of next year. And that is a pretty quick turnaround.”
During the recession that started at the end of 2007, the state’s jobless rate more than doubled. As the crisis dragged on, the state’s trust fund for benefits was exhausted.
At one point, Georgia owed the federal government more than $721 million.
All the economic winds were blowing in the wrong direction, said Butler. Claims were up and hiring was down, which meant that an increasing number of people needed benefits for as long as they could get them.
Moreover, with businesses failing and shedding workers, the tax revenue coming into state coffers fell.
The average weekly benefit a year ago was $265. This year, it is $259, Butler said. The average jobseeker is getting benefits for a little less time, 18 weeks compared to 19, Butler said. And the state is now paying fewer people: A year ago in August, the state was paying unemployment benefits to 71,145 jobseekers, Butler said. By this August, those rolls had shrunk to 60,314.
The state paid out $70 million a year ago. This August, the state paid $52 million in jobless benefits.
At the same time, tax revenues are up. In the first eight months of 2012, Georgia took in $720 million in employer taxes. During the same period of this year, revenues were $760 million.
The upshot is an improved loan picture: A year ago, Georgia owed the federal government $650.7 million, Butler said. As of Thursday, that debt has been trimmed to $296.3 million
Paying off the loan means lower payments on interest. That obligation has fallen from $28 million in 2011 to $16 million, Butler said.
The federal government raised taxes on the state’s businesses to help cover the loan, so as the loan is paid off, business taxes will decrease.