19 November 2010

True or False? Republicans Mismanaged Georgia Unemployment Benefits

Wednesday evening, WSB-TV (Atlanta) reported that 31 states --including Georgia-- owes the federal government more than $40 billion borrowed to cover unemployment benefits [State Could Owe Feds $1B For Unemployment. WSB-TV. Retrieved on 2010-11-19.]. Labor Commissioner Michael Thurmond (D - Georgia) told WSB political reporter Lori Geary that unless the economy gets moving again, "Georgia will continue to have an insolvent trust fund."

Instead of playing the blame game, the Democratic Party of Georgia would be best suited to work with the Republican majority towards getting our state's economy moving again, so that we can reduce the number of jobless individuals drawing on the unemployment insurance trust fund and begin paying some of this money back to the feds.


The next day, the Democratic Party of Georgia claimed that Georgia Republicans were responsible for the state being on the hook for millions to the feds.

"GA Republicans have mismanaged unemployment benefits and now might have to cut them or hike taxes on small businesses," read a posting on the Georgia Democratic Party's Facebook page.

The Democrats' claims touched off a debate in which I disputed their assertion that Republican mismanagement of the state budget led to Georgia owing the federal government $416 million.

First, while the General Assembly appropriates the funds for the state unemployment insurance program, it is the Georgia Department of Labor (GADOL) that actually administers the program and oversees the distribution of unemployment benefits. The current head of the GADOL is Democrat Michael Thurmond.

Secondly, Georgia Republicans have held a majority in the state legislature since 2005. In 2006, $46.6 million was appropriated by the GOP-controlled General Assembly to fund the state unemployment insurance program. In 2007, the GOP-led state legislature appropriated $46.8 million. In 2008, the Republicans appropriated $46.8 million. In 2009, the GOP appropriated $60.4 million. And finally, in 2010, they appropriated $56.6 million.

The $3.8 million cut between FY2009 and FY2010 could easily be attributed to the economic slow down, Georgia's double-digit unemployment rate, fewer businesses paying into the unemployment trust fund, et al.

With the exception of 2010, funding for unemployment insurance benefits have increased or stayed at the same level every year.

Where's the mismanagement?

Here's the Democratic Party of Georgia's response:

GA had astronomical unemployment in 2010-- higher than the national average for much of the year. State Republicans cut unemployment funding during record unemployment and we're running an alarming deficit because of it.

That's mismanagement.



How is that mismanagement?

If Georgia unemployment exceeded the national average for much of the year, that means fewer Georgians were working; if fewer Georgians were working, that means Georgia businesses were laying off their employees; if Georgia businesses were laying off their employees, that means those businesses weren't making much money; if those businesses weren't making much money, that means they weren't paying much into the unemployment insurance trust fund; and if they weren't paying much into the unemployment insurance trust fund, that means there's less money in the budget and cuts have to be made.

That's not mismanagement. That's the result of a poor economy.

It's a perfect storm for Georgia and 30 other states to begin running deficits on their unemployment insurance trust funds, resulting in the federal government having to step in to guarantee folks their unemployment checks.

Instead of playing the blame game, the Democratic Party of Georgia would be best suited to work with the Republican majority towards getting our state's economy moving again, so that we can reduce the number of jobless individuals drawing on the unemployment insurance trust fund and begin paying some of this money back to the feds.