On Thursday June 11, 2021, the Virginia Unemployment Compensation Commission received a report from the Virginia Employment Commission on the status of the Unemployment Trust Fund and the estimated increase in payroll taxes Virginia businesses will pay beginning January 2022.
Payroll taxes are expected to soar next year from an average of $90 per employee to $360 per employee. The trust fund has fallen from $1.4 billion before the COVID-19 pandemic to less than $180 million — even with a $210 million boost from federal aid last year.
As the only business organization to testify before the Commission, NFIB Virginia State Director Nicole Riley, testified to the significant impact this increase will have small businesses including making it more difficult to hire workers. Riley asked the legislators to use the incoming American Rescue Plan money to shield businesses from those increases, as other states have done.
Riley was quoted in the Richmond Times Dispatch, “This is clearly COVID relief. These are businesses and employers that never would have made these layoffs if it hadn’t been for government-mandated closures. Going from $90 to $360 in your payroll tax makes it more expensive for you to hire somebody,” she said.
VEC confirmed the state could make up those losses and shield businesses from big tax increases by depositing approximately $1.3 billion from the $4.3 billion in funds Virginia is expecting from Washington. It was reported Secretary of Finance Aubrey Layne will recommend to Gov. Ralph Northam and the assembly to allocate at least a billion dollars to the trust fund to prevent payroll tax increases.
NFIB Virginia will continue to press lawmakers to address Virginia’s unemployment insurance trust fund crisis during the anticipated Special Session later this summer. Your feedback will help us illustrate the adverse impacts UI rate increases are having on Virginia’s small businesses as they strive to recover. Please take a few minutes to respond to this SURVEY.