SAVANNAH, Ga. (WSAV) – Savannah Mayor Van Johnson had some choice words for Gov. Brian Kemp on Thursday.
“I am disgusted and I am disappointed because we feel that the governor and the state did a total about-face and did not keep their commitment,” said Johnson.
The mayor said late Wednesday that the city received a letter indicating that the state would be using $1.5 billion in CARES Act money to shore up the state’s unemployment trust fund, i.e. paying back a loan that had to be taken out with the federal government.
However, Johnson says many cities and counties across the state have been waiting for Round 2 and Round 3 distributions of CARES Act money to local governments.
The city of Savannah, for example, was expecting a total of $17 million in the next two distributions.
Johnson says that was money the city planned to use to recoup some of its own expenses in terms of public services and costs associated with COVID-19 and that in the second round of funding, which was expected shortly, they planned a grant program to provide help to local businesses to stay afloat.
“This was an opportunity to help our local businesses and to help our local folks and as of right now, the governor has taken that totally off the table,” the mayor said.
While the mayor was at City Hall Thursday indicating his frustration and anger, coincidentally, Georgia’s Commissioner of Labor Mark Butler was just next door at the Hyatt Hotel. Butler was the featured speaker at a meeting of the Tourism Leadership Council and told News 3 the idea to pay back the trust fund came from him.
“We presented the idea to the governor and we showed him the scenario going forward that if we did not shore up the trust fund how that was going to adversely affect Georgia businesses that pay unemployment taxes,” Butler told us.
Butler says if the loan is not repaid with CARES funding all at once, it would take the state about five years to pay it back and that would require about a 400% increase in what employers pay in their unemployment taxes.
The commissioner says if an employer has several hundred employees the extra cost could be several hundred thousand dollars over the repayment period. He says as many businesses are still trying to recover, an increase in the tax is not what business owners need right now.
“We don’t want employment taxes to cause more people to become unemployed which is basically what we’re headed toward,” Butler said.
Michael Owens with the Tourism Leadership council agreed. He says preventing a tax increase for businesses locally and statewide seems to make the most sense in terms of recovery.
“It’s a tremendous move by the governor and I’ve heard nothing but excitement by anyone who employs even a single person,” said Owens. “Business people don’t want to think about paying higher taxes right now.
Owens also said while a local grant program could be significant for the individual business owners that it may ultimately not be as beneficial as making the unemployment trust fund solvent again.
Still, Johnson told reporters the last-minute news that the CARES Act money is not coming to cities is “not fair and not right.”
Cody Hall, a spokesman from Kemp’s office told News 3 that they did “not break their word to local government entities.” He said there was always the understanding that options for the best way to use future CARES Act monies could and would be considered.
Still, Johnson said after a June letter from Kemp that officials from cities and counties across the state felt confident that future allocations from CARES would be coming their way. He said, “if that was not true there was ample opportunity to correct it.”
Johnson says cities like Savannah has been left without help at the 11th hour.
Hall told News 3 that while “some governments may have wished we had made a different decision, no local official has reacted the way Mayor Johnson has.”