SAVANNAH, Ga. (WTOC) - Georgia Gov. Brian Kemp announced Wednesday that nearly $1.5 billion in Coronavirus Relief Funds from the CARES Act would be allocated to the state’s Unemployment Insurance Trust Fund in an effort to curb future unemployment tax hikes.
According to the governor’s office, the allocation will save the average Georgia employer approximately $350 per year for each employed worker.
“COVID-19 has brought unprecedented challenges to nearly every business - large and small - and upended the lives of millions of Georgians,” Governor Kemp in a statement. "Through no fault of their own, thousands of people became unemployed overnight, businesses were shut down, and countless families suffered. Today’s announcement will save Georgia employers millions of dollars in state and federal unemployment taxes, prevent significant layoffs, and save the state millions of dollars in interest payments.
The Governor’s office states by the end of 2020, the Georgia Department of Labor (GDOL) estimates that the state Unemployment Insurance Trust Fund will have borrowed a total of $1.5 billion in response to the COVID-19 pandemic’s impact on Georgia’s labor force.
Savannah Mayor Van Johnson claimed in a Facebook post that the funds allocated to the Unemployment Insurance Trust Fund should have been available to local governments.
Mayor Johnson states, "We were notified moments ago that Governor Kemp has made a decision to use ALL of the remaining funding committed to local governments to repay the Georgia Unemployment Trust Fund to avoid having to raise the unemployment tax.
As a result of this decision, there will be NO Round 2 or Round 3 funding for local governments, which the City of Savannah has used to assist families and businesses affected by COVID."
The Governor’s office sent a letter to local municipal leaders back in June, outlining how the CARES Act funding would be distributed. Georgia received $4.1 billion in federal aid. And up to 45 percent could be transferred to local governments.
“I’ve seen the Governor’s guidance document back to June, and it was very clear about how this was going to go down. It would need to be reimbursements, not just a bunch of money that was coming to the City," said Michael Owens, President, Tourism Leadership Council.
At this point, city leaders have been told no additional federal funding from the state will be coming in for them to distribute throughout the community.
Mayor Johnson said on social media and again during a Zoom meeting Thursday that he is disgusted and disappointed by the move, saying it was his understanding - and other city and county leaders around the state - that millions more in CARES Act funding was coming. It was for that reason the city started planning on how to distribute a second and third round of aid for small business and housing and utility assistance.
“This has been widely reported. Certainly, all our plans here in Savannah, it’s been widely reported that we were expecting a phase two and a phase three, or round two, round three funding based on the negotiations with the Georgia Municipal Association. And so certainly, if that was not true, there was ample opportunity to be able to correct it. It was not corrected,” Mayor Johnson said.
In phase one, the City got about $7.5 million in CARES Act funding. City leaders opted to allocate the vast majority, 80 percent, to housing and utility assistance, as well as small business assistance. The remaining 20 percent went to help recoup COVID-related costs the City incurred.
“Obviously, that money is not going to happen. So for those businesses that were struggling, trying to make it, and the City’s intention to be much more intentional and be much more comprehensive in our distribution of those funds, as it is right now, the Governor has taken that totally off the table," said Mayor Johnson.
Owens did give credit to the Mayor’s goals to help local businesses though, but added, the Governor’s recent move to put billions in the Unemployment Insurance Trust Fund will have an even broader impact.
“The reality is, all of our businesses that employ people were facing a three to four hundred percent increases in payroll taxes for the next several years," said Owens.
“If you’re a small mom and pop with ten employees, that’s still a good bit of money. And if you’re talking a couple hundred employees, then that gets into real big money," said Mark Butler, Commissioner, Georgia Department Of Labor.
With no additional CARES Act funding able to be funneled through the City to small businesses, owners like Belinda Baptiste will have to make some hard decisions, and soon.
“If it happens it happens. If it doesn’t happen, then I just have to face the reality that I need to close shop. And I’m saying that really sadly because we’ve been here for almost 12 years," said Baptiste.
According to the city, Mayor Johnson and Savannah City Council had publicly committed to providing $1.6 million in round two CARES Act funding to support small businesses. More than 400 businesses requested assistance, seeking nearly $7 million of financial relief.