Your morning jolt: Georgia’s $588 million unemployment benefit debacle

There’s nothing more encouraging on a Monday morning than to have your state cited as an egregious example of poor judgment. From the Associated Press:

Washington — State officials had plenty of warning. Over the past three decades, two national commissions and a series of government audits sounded alarms about the dwindling amount of money states were setting aside to pay unemployment insurance to laid-off workers.

“Trust Fund Reserves Inadequate,” federal auditors said in a 1988 report.

State Labor Commissioner Mark Butler/AP

State Labor Commissioner Mark Butler/AP

It’s clear now the warnings were pretty much ignored. Instead, states kept whittling away at the trust funds, mostly by cutting unemployment insurance taxes at the behest of the business community. The low balances hastened insolvency when the recession hit, leading about 30 states to borrow $41.5 billion from the federal government to pay unemployment benefits to their growing population of jobless.

The ramifications will be felt for years….

Each state decides whether its unemployment fund has enough money. In 2000, total reserves for states and territories came to about $54 billion. That dropped to $38 billion by the end of 2007, just as the recession began….

A review of state unemployment insurance programs shows how states weakened their trust funds over the past two decades.

In Georgia, lawmakers gave employers a four-year tax holiday from 1999-2003. Employers saved more than $1 billion, but trust fund reserves fell about 40 percent, to $700 million. The state gradually has raised its unemployment insurance taxes since then, but not nearly enough to restore the trust fund to previous levels. The state began borrowing in December 2009. Now it owes Washington about $588 million.

Republican Mark Butler, Georgia’s labor commissioner, said his state had one of the lowest unemployment insurance tax rates in the nation when the tax holiday was enacted.

“The decision to do this was not really based upon any practical reason. It was based on a political decision, which I think, by all accounts now, we can look back on and say it was the wrong decision,” Butler said. “Now we find ourselves in a situation where we’ve had to borrow money and that puts everyone in a tight situation.”

Why might it be so easy for Georgia Republicans to acknowledge the mistake? The four-year tax holiday roughly spanned the Democratic administration of Roy Barnes.

***
Recent political history has shown us that the No. 1 sign that a politician is finished with public office is a preening self-portrait in front of a bathroom mirror. This, as documented by my AJC colleague James Salzer, could be No. 2:

In his last full day in office, Insurance Commissioner John Oxendine issued himself several licenses to sell insurance and adjust claims….

Oxendine did not take the mandated classes or licensing tests, using his authority as insurance commissioner to waive requirements for himself that apply to other Georgians seeking to sell insurance…..

Oxendine, who left office in January after 16 years, said late last week that he had more than enough experience regulating the industry and helping to write insurance law to qualify for the licenses.

“If 16 years doesn’t give you a little bit of insurance experience, I don’t know what does,” Oxendine told the AJC. “I think that’s [worth] a little bit more than taking a test and taking a class.

***
In a Sunday sermon in Marietta, state Supreme Court Justice Robert Benham said Cobb County should have more black judges. From the Marietta Daily Journal:

“Although we’ve accomplished a lot here in Cobb County, there is much to be accomplished. We need to have more people who look like you sitting on the bench,” he told members of Marietta’s Pleasant Grove Missionary Baptist Church. “Those who sit in judgment of their fellow man sometimes might need to look like the people they sit in judgment on.”

There has never been a black Superior Court judge in Cobb.

***
Service unions have called for a string of rallies at state capitols to express solidarity with public employees in Wisconsin. Georgia’s will be at 4 p.m. Wednesday.

***
Speaking of games of chicken, Matt Towery says Republicans in Washington should pull the trigger. From the Marietta Daily Journal:

It sounds harsh and cruel, but U.S. House Speaker John Boehner’s threat to shut down all but essential federal government services if the Democrats on Capitol Hill can’t actually reign in spending is not only the fiscally responsible approach, it is also one that would be popular with the public.

- By Jim Galloway, Political Insider

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35 comments Add your comment

Road Scholar

February 21st, 2011
9:30 am

It didn’t stop at the unemployment insurance fund. The state retirement fund was soluble in 2002 when it had a record return on investments made with employee and state money. The state money was apart of the employees compensation package since direct wages were below other private sector jobs. Then Perdue cut the state’s payment. It hasn’t been soluble since, comimng in now at about 90% funded.

Did they do the same to the teachers retirement fund? No! Teachers retirement fund is funded at about 105% (down from 110%).

So what did they do? Tried to pass legislation that would enable higher risk inveatments….you know, I have some waterfront property stuff. It didn’t pass based on the fallout from the employees. The author of the bill was a financial advisor who said that he wouldn’t directly benefit, but he refused to include (since it was sooooo gooood) teachers retiremnt in the same package. Why? “It was too risky and he didn’t want to make the many teachers in his family mad at him since it was so risky.

Oxindine is scum! Why isn’t it reversable? He didn’t pass the required coursework and gave himself the waiver! Hell, this is as bad as Perdue’s land tax break!

Justice should be color blind, but tell that to Cobb County’s politically blind voters. I guess they can’t find any minorities that can serve as a judge!

Matt Towery” The word “responsible” is key. Planned parenthood DOES NOT PROVIDE ABORTIONS! They help with family planning!

Douglas

February 21st, 2011
9:35 am

“Service unions have called for a string of rallies at state capitols to express solidarity with public employees in Wisconsin. Georgia’s will be at 4 p.m. Wednesday.”

As a state employee, I hope nobody shows. Those who do need to be sure to take leave time, but what do you bet they don’t?

Keep doing this GOP

February 21st, 2011
9:56 am

I would like to know why Mr. Butler suspended Georgia Works, a program that placed 60% of its enrollies in permemant jobs.

Was that a political decision? Since it was started by a Democrat ?

luangtom

February 21st, 2011
10:01 am

State employees have the right to organize and negotiate. However, they should not vector themselves above the private-sector in their demands for wages and benefits. Most all private-business has employees participate in paying for a portion of their insurances and retirement. Why not the government employees, too? Afterall, it is the private-sector employees that pay for the government employees through the income taxes and others. A real-world approach to negotiating may garner support for public employees from the private-sector and the retirees of the country.

TrishaDishaWarEagle

February 21st, 2011
10:14 am

Unemployment was never meant to be 99 FREAKING WEEKS!! And when congress authorized the extensions, it only pays about 60 cents on the dollar..the states picked up the rest of that unfunded obamaness..As much as I HATE Roy Barnes, this is not on him..this is on B-Hussein-O.

eatmotacos

February 21st, 2011
10:20 am

“It’s clear now the warnings were pretty much ignored. Instead, states kept whittling away at the trust funds, mostly by cutting unemployment insurance taxes at the behest of the business community.”

Georgia politics are’nt that complex. Sonny wasn’t quite through with wrecking the state in 8 years -his time ran out. The Real Deal will finish the job in record time – he barely got the boxes off of the moving vans before he reversed his position on illegal immigrants – “at the behest of the business community.” The taxpayers had better hang on to their seats, it’s going to be a rough ride.

[...] This post was mentioned on Twitter by Jim Galloway and sean walker, carol porter . carol porter said: Tried 2 holiday, but Galloway got me back in: "GA $588 M benefit debacle" http://tinyurl.com/5r44awz #gapolitics #GADems #gagop #tcot #gapol [...]

Cutty

February 21st, 2011
10:33 am

@ Trisha, I’m trying real hard not to call you a donkey’s behind. Terrible decision by Roy, but if Sonny and he were not so inclined to kissing the business community’s behind this wouldn’t have happened. Also, the state didn’t have to take the feds money of they didn’t want to pay it back. Blaming Obama only shows how gullible and delusional you are.

findog

February 21st, 2011
10:34 am

Douglas,
Are you at work today?
I believe that most State workers are off with the banking crowd, so they would not have to take leave time.

Indian Joe

February 21st, 2011
10:38 am

Why do these teachers especially, and all union workers, feel their work is more important that those in the private sector. As for teachers, if they were in the private sector, based on test scores, etc, they would have been fired long ago. I really feel their pin- they are asked to “contribute” a little to their retirement and health insurance – do they realize most in the private sector have to pay it ALL . What we need is another Reagan and the air traffic controllers – give them a day to get back to work – or fire them. I am sure there would be 20 people applying for every job that comes available. They are acting like spoiled rotten children – and these are the people teaching and supposedly setting the example for our children.

Lum

February 21st, 2011
10:44 am

Public sector unions should be illegal. They serve no useful purpose other than self aggrandizement. It’s not like their members are working in the mines, you know.

base

February 21st, 2011
10:45 am

Road Scholar has it right! Crooks at work!

Another Gov Employee

February 21st, 2011
10:52 am

@ Luangtom

“Most all private-business has employees participate in paying for a portion of their insurances and retirement.”

Do your research the State Employees in Wisconsin aren’t opposed to this, and have conceeded that they are willing to negotiate the terms in good faith. They have agreed to pension and health care concessions. However, what they will not do is give up all of their collective bargaining power and why should they?

I support them wholeheartedly in their attempt to leverage their collective power. They have just as much of a right as big oil, big banks, healthcare giants and other Too Big to Fail entities that have shaped the political and economic discourse in this country.

Steve O

February 21st, 2011
11:06 am

luangtom -

I don’t know about city or county employees but state employees do and have paid a portion of their pay as a contribution to help fund the Employees Retirement System and they pay a portion of their their other benefits as well. My monthly health insurance premium for myself and my wife is about $248. – dental is about $50. Also, there is no longer a defined benefit retirement plan available for state employees – anyone hired in about the last 3 years – when it was abolished for new hires.
Get your facts straight!

double

February 21st, 2011
11:08 am

Yeah! And I suppose BHO is responsible for taking our money off the gold standard.States need to cut fully funded retirement plans.Another reason for term limits .Pay them now pay them a lifetime.

findog

February 21st, 2011
11:12 am

Douglas, where are you?

td

February 21st, 2011
11:14 am

Let us get the facts straight. Georgia is in no way like Wisconsin or for that matter any other northern state. The public workers DO NOT HAVE UNIONS(Including teachers) in Georgia. Teachers have some of what most would call (selective service) rights. Once they have signed their 4 year contracts the counties can not fire them unless they can prove cause. All other state workers do not even have this right. Zell did away with those rights with Georgia Gain. A public employee can be fired at will just like everyone else in the private sector.

Also, All new state employee’s will receive a 30% (of highest years salary) pension for working 30 years now. Current state employees and teachers receive 60% after 30 years. There are no automatic pay raises for state employees (only COL when the legislature approves). Teachers receive merit raises (during certain years of service) plus and COL’s approved by the legislature.

Georgia has had the foresight (Republican and Democratic years) to see that they could not afford these benefit packages of the union states and have done a good job and getting a handle on the problems. Georgia is still the second lowest tax state is the country and does not have as severe problems as other union states.

RL

February 21st, 2011
11:15 am

Governmet workers are so employed because they are too lazy and incompetent to perform in the private sector. They live off the earnings of the working population and produce nothing. Shut down all the worthless offices they occupy and watch nothing happen.

Steve O

February 21st, 2011
11:16 am

Indian Joe -

You are delusional if you think all private sector is focused on performance – that is a myth. I have worked in both and can tell you the worst atmosphere I ever saw was one summer during college when I worked for the phone company. Those guys did more work figuring out how to avoid work than it would have taken to go ahead and get the jop done – maybe it’s changed in recent years – I don’t know. That was an absolutely disfunctional work environment and I came away from the experience in amazement that phone systems actually work!
Also, teachers in Georgia, just like most, if not all other public employees here, do pay considerable portions of their wages to buy health insurance, dental insurance, help pay for their retirement, etc., so I don’t know where you are getting your information.

Jay

February 21st, 2011
11:29 am

Who in Georgia needs reality TV? We’re damned lucky that national media haven’t focused more on the humiliating, declasse culture and politics of this state. Start with Speaker Ralston and go from there. (Not sure if it’s going up or down. He’s pretty low, ethically speaking.) Take Chip Rogers, Oxendine, Richardson, that legislator who had the affair with his mother-in-law while his wife was pregnant, a slew of ethical violations – and those are just the elected officials. Look at who’s running the state agencies.Even those guys who were lawyers for the Ethics Committee were fired for ethical violations. Oh, yes – there’s a high ranking (#1?) in sex trafficking, bank closings, obesity, illiteracy and home foreclosures. But let’s not think too much about this stuff. What about them dawgs?! Oh, did they ever replace that athletic director who was fired (with a handsome severance) because he was caught in a compromising situation with a very drunk young woman?

Another Gov Employee

February 21st, 2011
11:38 am

Gotta hand it to the Republicans they know that the lack of critical thought in our political system allows them to get away with catch phrases and buzz words like “lazy, burdensome, unionized labor, obamacare, socialism” to describe traditional institutions that support Democrats without a shred of any real empirical data to back up their claims.

Even though Wisconsin has a budget shortfall, 2/3s of Corporations in Wisconsin pay NO TAXES and the revenue received from Corporations has been cut in 1/2 since 1981!! Of course you can’t balance the budget there, it will always be necessary to balance it on the backs of teachers and other civil employees.

Something is wrong in this country when people advocate for the top 10% in our country that control 90% of its wealth. You can’t advocate for Americans to catch up in Math and Science but advocate for teacher layoffs and furloughs all because the top 1% don’t want an increase in taxes or the corporations that employ people that received a Public Education dont pay taxes. You would think we had to spend $25 billion to bail out teachers instead of banks.

The stalemate in Wisconsin is simply the Republican’s “Southern Strategy” being played out nationwide. If low and middle-income White Americans ever stop voting against their own best interests, perhaps we may see an actual increase in average median (adjusted for inflation) increase after being stagnant for 20+ years.

roscoe

February 21st, 2011
11:39 am

RL-

Stop buying in to the Reaganesque, Republican nonsense about government workers being useless and not capable of working in the private sector. It’s insulting. Intentionally, I’m sure. And, as it pretty much has always been, dead wrong and revealing of your total and complete ignorance of the realities of government.

Public service is just that. Service. With the economy the way it is the state doesn’t have to hire lazy folks – they can hire the best, and they do. The vast majority of the folks working in government are talented, hard-working, dedicated people. They do the things private industry won’t do because there’s no profit in it. And, at least in Georgia, they usually have fewer rights than do folks in private industry. I’ve seen plenty of workers get fired, lots of staff reductions in the last couple of years, and more. Just like private industry, any kind of a raise, absent a promotion, hasn’t happened in the last several years and isn’t likely to happen any time soon. And most of those workers are doing the work of the several people that have been let go in their departments or agencies that still needs to get done – like processing your income tax refund, maintaining your roads, and educating your children.

And by the way, you get what you pay for – in government or private industry. If you want a government full of 50 cents an hour workers with no education and less knowledge, then be ready for roads that are little more than dirt tracks, income tax refunds that get paid months or years late and when they do are wrong, and schools that don’t teach much of anything.

Montag

February 21st, 2011
11:39 am

“Now (Georgia) owes Washington about $588 million”

Why bother to be fiscally responsible when you know that you always have Washington to fall back on. Coming next: the state will try to get the feds to either forgive the loan, reduce the amount owed, or suspend repayment indefinitely. At the end of the day the U.S. Treasury almost always gets the shaft.

Bill Orvis White

February 21st, 2011
11:40 am

How about eliminating all states’ unemployment insurance funds? Those monies should be returned to the private sector where jobs are created. More states like Georgia, Texas, the Carolinas, my Mississippi and Florida thrive because of its low/no tax culture, high moral values, great weather and most of all, no union thugs. There are jobs down here in the South unlike Godless New England/the East, the Midwest and Left Coast. Any man who wants to make a good living, raise a good family need not look further than the South.

Yes, shut the federal government down NOW! Since the Socialist Democrat party cannot operate like adults, have the guts Mr. Speaker, to shut the system down this very second. We will $ave money, hassle and trouble. It’s high time to do the right thing instead of giving in to a bunch of lazy whiners.

Amen,
Bill

future

February 21st, 2011
11:49 am

Second guessing or criticizing one’s predecessors is an easy thing to do – addressing an issue or developing solutions to assist those who are unemployed is what is needed. I read before that GA remained solvent longer than most states, because the trust fund was managed so well. So it seems ironic a Republican would challenge support to the business community when it was the Republicans who gave billions to bale out the business community under the Bush administration and we need the business community to get people back to work. Saying GA borrowed money because of the tax break given to businesses also seems too simplistic. Other factors must have played into it such as benefits extending to 99 weeks, unemployment lingering, fewer companies coming to GA and too many left, the list could go on and on including the poor leadership of the past Governor and legislature, but that would be placing blame instead of solving the issue. I hope our new labor commissioner will focus on what he plans to do and communicate his plan to reduce unemployment and make the trust fund solvent … this is what I’d like to hear from him.

Lum

February 21st, 2011
12:16 pm

By the way, what is the AJC’s overall debt, and how did you allow that to happen? Just axin..

Cutty

February 21st, 2011
12:18 pm

Yeah let’s beat up on teachers, police officers, and firemen that lost large sums of their pensions to banks that used their funds on a craps table (stock market). Not one banker went to jail, and they left the states holding the bag with unfunded pensions. To fix it let’s punish the pensioners for being government workers instead of suing the banks for skirting their fiduciary duties. You republicans are idiots.

I'm breaking up

February 21st, 2011
12:23 pm

In a Sunday sermon in Marietta, state Supreme Court Justice Robert Benham said Cobb County should have more black judges. From the Marietta Daily Journal:

And we’re letting this idiot make decisions that affect us all?

@Bill Orvis White

February 21st, 2011
11:40 am
Yes, shut the federal government down NOW!
Amen,
Bill

Bill Orvis White for PRESIDENT……yes, yes, yes.

@Lum

February 21st, 2011
10:44 am
Public sector unions should be illegal.

Hallelujah and Amen

@TrishaDishaWarEagle

February 21st, 2011
10:14 am
Unemployment was never meant to be 99 FREAKING WEEKS!! As much as I HATE Roy Barnes, this is not on him..this is on B-Hussein-O.

TDWE – you go, girl :)

Do you really care for GA?

February 21st, 2011
1:21 pm

So when Democrats cut taxes it does not work but when Republicans do it works? I hate party politics = nothing gets done.

I heered he was an Ayrab

February 21st, 2011
1:30 pm

but why are y’all complaining? you voted for it, so enjoy it.

SawBe

February 21st, 2011
1:41 pm

Wow I am so amazed. When you extend unemployement benefits from 26 weeks to two years, it sucks away the trust fund. Why didn’t we see this coming? Um….many of us knew there was a day of reckoning coming.
As for state employees demonstrating at four PM on Wednesday afternoon. I sincerely hope none of them shows up. If they do we certainly expect them NOT to come on tax payer funded time.
Teachers who call in sick to protest their benefit cuts have forfeited the right to be considered “professional”. Down with all public employee unions!

hl

February 21st, 2011
1:58 pm

Some folks slept during the Bush Administration..
Boehner voted for unsustainable tax cuts.
Boehner voted for a unfunded Prescription Health and expanded Medicare
Boehner voted for money to fund two wars without paying for it
Boehner voted for the Bush stimulus fund without funding

If you think that one party is responsible for the deficit you are sorely mistaken. Greenspan went before the Republican Congress and said deficits don’ts matter.
Now Boehner thinks it is responsible to cut spending in such a way that it would put 800000 on the street. That sure won’t increase the amount of tax dollars that the Fed. collects.
If he is serious about cutting spending, cut the agriculture subsidies.
If he is really serious about cutting spending, have every Representative cut their benefits.

In fact why are we paying for his health care and his pension plan. That’s not the American way.
He should pay for it himself.

catlady

February 21st, 2011
6:52 pm

What I said in an earlier thread: Ox, just because I have (used the bathroom) for 58+ years doesn’t make me a plumber!

Folks, there HAS to be a way to undo things when politicians grant themselves special favors.

TnGelding

February 22nd, 2011
3:41 pm

It was during the booming Clinton years, as well. I’m surprised the new commissioner isn’t calling to discontinue the tax and unemploymnet compensation altogether. Wasn’t the GOP just questioning extending benefits because they weren’t paid for when they knew the mechanism was in place to replenish the funds?

Curious George

February 22nd, 2011
6:49 pm

Road Scholar: You don’t know what you are talking about! Barnes and his financial gurus lowered the State’s contribution to the Employee’s Retirement System. Their plan was to reinstate the larger contribution when Barnes was re-elected. Well, we all know what happened next.
When the 4-year tax holiday was announced in 1999, I heard Michael Thurmond say in a conference that Georgia’s trust fund was so fat that there was no way all that money could be spent. Well, we all know what happened next.