Businesses brace for unemployment tax hike

By Andy Jenks - bio | email
Posted by Terry Alexander - email

RICHMOND, VA (WWBT) - The unemployment system that benefits so many out-of-work Virginians, is running low on money. The commonwealth is already borrowing millions to get through 2009, and could take out a loan of more than a billion dollars to get through the next several years. But sooner or later, the loans won't be enough. Businesses like Pleasants Hardware will have to pay more into the system.

"I get a little nervous when I start hearing about possible projections," said James Hatcher, President of Pleasants Hardware.

Currently, businesses pay an average unemployment tax of $95 dollars per full-time employee. The state employment commission, is projecting that cost will be $171 dollars next year, and $263 dollars by 2012.

"I would like to think that they won't have to go up that much. But it would take a tremendous turnaround," said State Senator John Watkins.

State Senator John Watkins chairs a commission on unemployment. He says the recession's impact on the benefit program is unprecedented.

"It's gonna hurt. It's gonna hurt new business, gonna hurt small business, gonna hurt big business," said Watkins.

While Virginia's unemployment is not as bad as the rest of the country - the question, still, is what will it take for a turnaround?

"There's only one way to solve that, and that's to create jobs," said Watkins.

The problem is a future that includes higher taxes, may not encourage businesses to bring on new people.

"If we don't hire this painter, or we don't buy this vehicle or don't do these other things that we might otherwise have done, then that impacts people that are in those trades," said James.

As for the loans, Virginia won't have to pay interest on them until 2011, but there will be changes to some unemployment benefits for people who also receive social security.

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