Georgia plans to use federal funds to repay a federal loan used to replenish the Georgia Unemployment Insurance Trust Fund.
Gov. Brian Kemp said Wednesday as much as $1.5 billion allocated to Georgia through the Coronavirus Aid, Relief and Economic Security (CARES) Act will be used to repay the U.S. Department of Labor for loans needed to continue paying unemployment benefits to jobless Georgians.
The Georgia Department of Labor (GDOL) estimated the state will have borrowed $1.5 billion to pay out the unprecedented amount of claims brought upon by the response to the COVID-19 pandemic.
Kemp said using the federal relief funds to repay the loan will result in the state not having to raise unemployment taxes on businesses.
“Through no fault of their own, thousands of people became unemployed overnight, businesses were shut down, and countless families suffered,” Kemp said in a news release. “Today’s announcement will save Georgia employers millions of dollars in state and federal unemployment taxes, prevent significant layoffs, and save the state millions of dollars in interest payments.”
The average Georgia employer will save about $350 per year in unemployment taxes for each employee, Kemp said. By using federal funds to repay the loan immediately, Georgia employers will be able to keep their Federal Unemployment Tax Act tax credits, Kemp said.
“Without the transfer of funds, the state will have to increase unemployment tax rates for employers between 300% and 400% to make headway on paying off the loan,” GDOL Commissioner Mark Butler said in a statement. “This reallocation of federal funds will allow more employers across the state to focus on the growth and success of their businesses without having the additional pressure of a rising unemployment tax.”
The GDOL has paid nearly $15 billion in state and federal unemployment benefits since the beginning of the pandemic in March, the agency said. From the week ending March 3 through the week ending Oct. 3, 3.8 million initial unemployment claims have been processed, which is more than the past eight years combined, the GDOL said.
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