The state agency responsible for sending unemployment benefits to the hundreds of thousands of Virginians that have found themselves out of work amid the coronavirus pandemic says it will run out of money within two months.
After paying out $2.6 billion in state benefits so far, officials with the agency expect the trust fund to run a deficit of $750 million by year’s end.
Officials with the Virginia Employment Commission said Thursday that it will be forced to borrow money from the federal government to continue making benefit payments, and that the state’s businesses, some of which have been crippled by the COVID-19 shutdowns, will be hit with higher taxes.
The agency said some businesses could be facing tax bills of about $550 per employee as the tax rate rises. That could also be on top of federal unemployment taxes that amount to $420 per worker. Virginian businesses have been eligible for a 90% discount on that federal tax, but if Virginia borrows money from the U.S. government and can’t pay it back according to the government’s terms, it could affect that discount.
Since the pandemic began to take hold in Virginia in mid-March, more than 1 million initial claims for unemployment have been filed by workers who have lost their jobs.