Governor Proposes Filling Virginia’s Unemployment Fund

Date: August 04, 2021

Last week, Governor Northam and legislative leaders announced their proposal to commit more than $860 million in federal American Rescue Plan funding towards replenishing the Unemployment Insurance Trust Fund. The proposal also includes language directing the VEC to freeze employers’ experience rating to pre-pandemic levels when calculating their tax rate for 2022.

The General Assembly convened their Special Session on Aug. 2 to review and approve how Virginia would spend these federal dollars. Both the House and Senate have initially approved this provision in their proposed budgets. Final approval is anticipated by mid-August.

In May, the Virginia Employment Commission estimated it would take $1.3 billion to get the fund back to pre-COVID levels. NFIB State Director Nicole Riley was quoted in several statewide papers, saying, “We appreciate that the governor is advocating a large sum of money towards a deposit in the Unemployment Trust Fund. We’re encouraged by this news and look forward to seeing if this deposit will significantly blunt the anticipated quadruple increase in taxes small employers will have to pay in January. “

Previous reports estimated Virginia businesses’ payroll taxes would quadruple in January 2022 unless significant funds were deposited into the Unemployment Fund. VEC projected payroll taxes were expected to soar next year from an average of $90 per employee to $360 per employee. New estimates on the average tax rate have not been disclosed at this time.

Related Content: Small Business News | Virginia

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