The Virginia Employment Commission recently announced that the money it pays out in unemployment benefits to out-of-work Virginians will run out sometime this week. A spokesperson for the agency, said VEC expects to apply for a loan from the federal government to shore up the fund.
Unemployment claims in Virginia have been decreasing steadily since the state began reopening its economy, but they are still higher than last year. Continued unemployment claims dropped to 160,764 for the week ending Oct. 3 – a 7.5% decrease from the previous week and a big drop from mid-May, when claims reached about 400,000.
Virginia has asked the federal government to forgive these loans, but if it does not, the state likely will have to raise business taxes to take in enough money to pay it back.
Also, some states have tapped existing federal CARES Act funding to replenish their trust funds, but that would be a decision that would need to be made by Governor Northam.
NFIB Virginia is asking the Governor and General Assembly to use federal CARES Act money to shore up Virginia’s unemployment trust fund to reduce any tax increases businesses may be facing in 2021.
Virginia’s trust fund last ran a deficit during the Great Recession and had borrowed $487.5 million from the federal government as of April 30, 2011.
Going into the pandemic, the state had amassed $1.46 billion in its trust fund. By the end of June, though, the fund had shrunk to $500 million.