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I was on a teleconference this morning with Mark Butler, commissioner of the Department of Labor. He was asked about the solvency of the unemployment trust fund.
"We're good," he said, laughing. "We've got this."
I am not so sure.
"We're good," he said, laughing. "We've got this."
I am not so sure.
The state has $2.6 billion in the unemployment trust fund. It's paid out $300 million so far this year, he said: twice as much as the entire previous year. Last week, the trust fund paid out $41.8 million, on about 400,000 claims. We're up to a million claims now. So triple that.
If the state is consistently paying out around $100 million a week, that's 26 weeks in the bank. That assumes things don't actually get worse.
(Hint: things are still going to get worse.)
But Butler said we can borrow money from the federal government if we spend it all down.
(Hint: things are still going to get worse.)
But Butler said we can borrow money from the federal government if we spend it all down.
Except ... we really can't.
I mentioned yesterday that the state has a hard constitutional cap on income taxes at 6 percent. Well, that's not the only restriction.
By law, Georgia CANNOT borrow more than 5 percent of its previous-year revenue in a year.
I mentioned yesterday that the state has a hard constitutional cap on income taxes at 6 percent. Well, that's not the only restriction.
By law, Georgia CANNOT borrow more than 5 percent of its previous-year revenue in a year.
The budget this year was for about $26 billion. We're probably looking at revenue of about $20 billion, realistically. That means a maximum debt load of about $1 billion, which must be paid back in full before more money can be borrowed -- another constitutional provision.
At $100 million a week in unemployment insurance claims, that's 10 weeks to hit a billion. And that's if the state exhausts its entire capacity to borrow just to cover unemployment and not, say, the cost of uncompensated medical care, or shoring up revenue shortfalls for cities.
Basically, if we have 15 to 20 percent unemployment for six months, we're in deep s--t. Anyone who claims otherwise is lying.
We're ALREADY in deep s--t financially.
And the only way out is almost certainly a tax hike on businesses, just to keep the UI fund solvent.
We're ALREADY in deep s--t financially.
And the only way out is almost certainly a tax hike on businesses, just to keep the UI fund solvent.
Republican governor, raising taxes on small businesses, after all of this. You can imagine what that's going to look like. I'm not even sure he can do it, because Republicans are elected on the basis of who can scream "SOCIALISM" the loudest and not on whether they can govern.
The other alternative would be for the federal government to simply bail Georgia out.
Except that will have to happen in 2021.
Now, tell me: without bluster or bulls--t, how confident do you think you would be as governor that the feds will be friendly to a GOP state in 2021?
Except that will have to happen in 2021.
Now, tell me: without bluster or bulls--t, how confident do you think you would be as governor that the feds will be friendly to a GOP state in 2021?
