Georgia’s government maintains a AAA credit rating and owes relatively little money to creditors. But we’ve run up one debt that is breathing down our necks: to the federal government, for unemployment benefits.
The recession walloped Georgia’s Unemployment Insurance Trust Fund, wiping out reserves of nearly $1.3 billion and leaving us to borrow from Washington to pay benefits to the jobless. The trust fund once totaled $2 billion, but it never quite refilled after legislators approved tax holidays totaling about $1.1 billion during Roy Barnes’ administration and somewhat smaller extensions during Sonny Perdue’s tenure.
How should Georgia pay down its federal debt for unemployment benefits?
Total Voters: 213
Today, we owe the feds $721 million. Starting next year, federal unemployment insurance taxes will rise each year until the debt is repaid. And with the state’s unemployment rate rising to 10.3 percent in September, payouts are going to continue for some time. Taxes are set at an average of $187 per worker per year now, and they are due to rise by $21 in 2012 and an additional $21 in 2013. That puts us “under the gun to get this paid back,” Georgia Labor Commissioner Mark Butler told the AJC Thursday.
To that end, Butler has proposed that the Legislature cut benefits for new applicants going forward. Checks for “top earners” would fall to $300 a week from $330 a week now, and the state could reduce the number of weeks it pays benefits. (Federal benefits currently are paid for 99 weeks.)
Alternatives for repaying the debt include raising unemployment taxes on businesses, selling bonds to take advantage of low interest rates (Georgia pays the feds a 4 percent rate) and devoting scarce general revenues. Which option is best? That’s this week’s Poll Position. Answer in the nearby poll, and offer an explanation — or other ideas — in the comments thread below.
– By Kyle Wingfield