Virginia to seek $838-million loan to pay unemployment

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

RICHMOND, VA (WWBT) - Virginia is again running low on money to pay unemployment benefits, so it needs a loan. The question is who has an extra $800-million?

The lender will be the federal government, which is shelling out billions to states so they can pay unemployment benefits. But eventually the loans have to be re-paid.

For every 100 Virginia workers, seven are unemployed. That's almost twice the number from two years ago, and it's expensive for the Commonwealth to pay all those unemployment benefits.

"It's projected we may have to start borrowing again before the end of this calendar year," said John Broadway of the Virginia Employment Commission.

Today, state lawmakers learned that Virginia may ask the feds for another $838-million over three years. While that's not as bad as other states, it's still unclear how the loan will be paid back.

"It appears to me that, by default, we go to a surtax on employers," said Del. Joe Morrissey, D-Henrico.

Employers, now, are starting to feel like the government is piling on. By law, they're already paying more tax into the unemployment system. Anything more, they say, makes it unlikely that they'll hire new workers in the short term.

"Sometimes you get to the point where that may be the only solution, but then again, another tax on top of all that's being paid right now, it pressures down on the retail industry," said George Peyton of the Virginia Retail Federation.

If there's a positive sign, it's that the eventual holiday shopping season may put at least some people back to work, if only temporarily.

"And there's a generous pool of people to choose from," Peyton said.

But over time, with so many people unemployed, and so many businesses paying more to support the system, the trends don't appear to be in anyone's favor, for now.

A decision on how, specifically, to pay off the loan to the feds would likely be debated in next year's General Assembly session. In the meantime, Virginia remains able to pay unemployment benefits with borrowed money.

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