The state labor department borrowed nearly $440 million from the federal government in recent years to cover unemployment benefits during the recession, and must now pay back more than $730 million.
At issue in the Senate was how to pay that debt and replenish the state’s unemployment insurance trust fund. Lawmakers debated for nearly two hours, and were at times emotional about the real-life stakes in their vote.
“It is real,” said Sen. Charlie Bethel, R-Dalton, who choked up as he recounted his own painful experience of having to watch his co-workers at a North Georgia carpet company lose their jobs in the down economy. “I have stood in front of a room of people that I love and told them, ‘You haven’t done anything wrong, but your job is gone.’ It is the worst thing I’ve ever done. This should hurt, but it is responsible.”
The bill passed by a 34-13 vote on partisan lines. While Democrats agreed some action is necessary to repay the debt, several blasted the plan as potentially unconstitutional and harmful to the unemployed.
“This is our message to the middle class in this state that is hanging on for dear life,” said Sen. Nan Orrock, D-Atlanta. “It puts all of us in a bad position to go back home to communities that have already been damaged.”
Sen. Fran Millar, the bill’s sponsor, said the proposal would repay that debt by 2014 and replenish the state’s unemployment trust fund by 2016 to $1.1 billion.
He argued the plan was painful but necessary, and shares the burden among businesses, the unemployed and the state.
“We have an obligation in the state to make sure we’re fiscally solvent,” Millar said. “It’s a step we have to take. It’s not popular. We’ve got to bite the bullet and we’ve got to do it now.”
Currently, employers are charged $21 per employee towards repaying the trust fund.
Next year, that amount would double, and it would double again two years later.
“If we have these kinds of surcharges on our employers, you can forget about job creation,” Millar said.
Effective July 1, unemployment benefits would be reduced from 26 weeks to a sliding scale of between 12 and 20 weeks, depending on the unemployment rate. And the unemployed would have to wait one week before their benefits kick in.
Several senators took questioned why the Labor Department did not act sooner to address the looming problem.
“I was hopeful that the Labor Department was going to come up with a plan,” Millar said. “Are we having to intervene because I don’t think they did their job well? That pretty well cuts to the chase.”
Labor Commissioner Mark Butler said after the vote that the department has been working closely with House and Senate leadership to address the issue and dismissed accusations that they have not been involved in the process.
“We were the ones that brought light to this in the first place,” Butler said. “We don’t have the authority to make a lot of changes.”
Butler said the Senate proposal is “a start,” and that he hopes the debt can be paid off in no more than three years to avoid additional penalties for Georgia businesses.
Democrats also questioned whether the Senate could initiate such a proposal, which they said should start in the House because of its fiscal implications. A provision in the bill would repeal it if it is later found unconstitutional.
The bill now heads to the House.