This year about 50 percent of the money in Georgia’s unemployment insurance fund came from the federal government.
The state took out the loan earlier this year because it couldn’t afford to pay unemployment benefits to record numbers of Georgians.
Now the state owes more than $450 million.
The loan is interest free for a year but starting in 2011 Georgia will have to start paying close to 4 percent on the balance.
Labor Commissioner Michael Thurmond says the problem should take care of itself once people start getting jobs.
But he says he doesn’t see that happening soon and some hard choices could be in store for lawmakers:
"The only other two options are to either raise taxes or reduce benefits and obviously both are very unpopular alternatives."
Georgia is one of 32 states to borrow money from the feds in an effort to narrow unemployment shortfalls.
With an unemployment rate of nearly 10 percent, Georgia has spent 37 consecutive months above the national average.