Unemployment taxes could put state in better shape, Georgia appropriations leader says
Georgia Senate Appropriations Committee Chairman Blake Tillery, R-Vidalia, talks to the media Wednesday, June 17, 2020, at the Georgia state Capitol in Atlanta after his committee approved a fiscal year 2021 budget.
(The Center Square) – Georgia is collecting a record amount of revenue from unemployed workers, according to Senate Appropriations Chairman Sen. Blake Tillery, R-Vidalia.
As the state pays out billions of dollars in unemployment benefits to laid-off workers, it has collected about $120 million to $135 million a month in state income taxes from the payments, Tillery said. Before the pandemic, the state collected between $2 million and $4 million a month from unemployment compensation checks.
It’s too early to determine what that means in the long term for the state’s fiscal outlook in the wake of the COVID-19 pandemic, Tillery said.
“We’re going to see what that’s going to do for the future,” he said during Georgia Policy Foundation’s virtual forum Tuesday. “I’m concerned that that may have artificially held up our revenues a little bit where things may not look quite as bad as they really were.”
Early revenue projections led state officials to direct state agencies to prepare for 14 percent budget cuts. Later revenue reports showed that the declines were closer to 10 percent.
The General Assembly, as a result, in late June cut $2.2 billion from the 2021 fiscal year budget.
June net tax collections were about 8.8 percent lower than June 2019. The state collected $1.9 billion in June, which was $187 million less than the same time last year.
The state collected about $22 billion in fiscal year 2020, which is about $1 billion, or 4.4 percent, less than what was reported at the end of the 2019 fiscal year.
Tillery said it will take until September or October to know if the taxes being withheld from unemployment payments are making a real difference.
From the week of March 21 through the week ending July 18, the Georgia Department of Labor processed 1.1 million valid unemployment claims and paid out more than $2.3 billion in state benefits, the department said.
Unemployed Georgians can receive up to $365 weekly and can be compensated for up to 14 to 20 weeks, according to GDOL. The state has also issued more than $8 billion in federal supplemental unemployment benefits that were approved by the CARES Act passed in late March. That supplement expires Friday, though Congress is debating a followup measure.
Tillery said if the federal government extends the supplemental programs, the state could be in good shape.
The nationwide July tax-filing extension also leaves the door open for a potential $600 million for the state, Tillery added.
“As senators asked me, I’ve told him if it’s less than $300 million, then I’m going to be very nervous,” he said. “If it’s $400 or $600 [million], I’ll feel OK. If it’s over $600 [million], then we’ll feel really good.”
