As more people in South Carolina find jobs, the S.C. Department of Employment and Workforce is whittling down the debt it took on during widespread unemployment in the worst recession in a lifetime.
The agency said Wednesday that it has made a voluntary early payment of $60 million to the federal government toward its unemployment trust fund loan. The state still has $396 million of the $977 million loan left to pay and expects to complete repayment by the end of next year, officials said.
“For the past three years, South Carolina has made early, voluntary repayments to the trust fund loan, further saving the state, and ultimately its businesses, interest costs,” the agency’s executive director, Cheryl M. Stanton, said in a release. “Making this $60 million early loan payment could not be possible without the work of the state’s business community in improving South Carolina’s economy faster than expected.”
The early repayment saves the taxpayers and businesses of South Carolina $1.4 million in interest, Gov. Nikki Haley said in the statement.
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The agency is able to make the early payments because tax rates for this year were set last fall when fewer people in the state were working. However, as the jobless rate has plunged rapidly to 5.5 percent in March, nearly 78,000 South Carolinians have found jobs since last September. That led to unanticipated tax collections by the department and fewer pay outs for unemployment claims, the agency said. Between October 2013 and April 2014, the state paid $23 million less in benefits than the same period a year earlier.
The state’s early payments also have earned it a waiver from the federal government for the past three years, allowing the state’s businesses to avoid higher federal unemployment taxes because of the debt.
“With our unemployment rate at a six-year low and more people working than ever before, it’s clear we are moving in the right direction and today’s announcement is further proof that it’s paying off for the people of our state,” Haley said.
While the unemployment rate has reached pre-recession levels, 24,000 fewer South Carolinians are in the labor market – either working or actively looking for work – since it reached its peak in January 2013. That means some have dropped out of the job hunt.
The U.S. Department of Labor recommends that the state have $780 million in reserves, which represents a year’s worth of benefits paid, but the state must pay off its debt before it build its reserves.
The Associated Press contributed.