Originally created 03/06/03

Senate passes bill to extend exemption on unemployment compensation tax



ATLANTA -- The Georgia Senate passed a bill Wednesday that would extend an exemption on the unemployment compensation tax for businesses - a move labor organizations say is a mistake that would deplete the state's unemployment fund.

"The business community has saved millions of dollars but they have to understand that the trust fund is so important," Richard Ray, president of the Georgia AFL-CIO, said.

The state government uses the tax to pay unemployment compensation benefits for qualified Georgia workers. The state fund that pays unemployment benefits is expected to become insolvent sometime in 2004, Ray said.

The Senate voted 41-1 on the bill sponsored by Sen. Robert LaMutt, R-Marietta, who had strong words for Labor Commissioner Michael Thurmond.

LaMutt claimed Thurmond's office won't supply him with numbers on how severe the impact of the tax exemption would be on the unemployment fund.

"Commissioner Thurmond has a clear interest in nothing being passed out of the Senate and figures if he stalls long enough, nothing will," LaMutt said. "The economic welfare is in peril based solely upon the commissioner playing politics. He is out of order and out of control."

There is about $1.2 billion in the fund, but with the rate of unemployment raising, the fund could be depleted by the end of the year if the exemption continues.

The number of laid-off workers filing for unemployment benefits for the first time in Georgia increased 25.8 percent from December to January, according to the state Department of Labor.

Thurmond's department currently is servicing 112,139 unemployment insurance claims.

"I am just astonished by (LaMutt's) claims," Thurmond said. "Right now we are in negotiations with the governor's office to find out what will be an appropriate tax. There is a problem and we are trying to find a remedy."

About 43 percent of Georgia businesses don't pay any taxes on their employees, Thurmond said.