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Virginia To Decide How To Fund Next Year's Unemployment Benefits

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Virginia owes $20.2 million in interest to the federal government on money borrowed to fund extended unemployment benefits. The state must now decide how to fund next year's unemployment benefits, and their decision could impact employers who pay into the trust fund.

A Virginia unemployment compensation commission discussed what the state’s burden would be if it borrowed an additional $251 million to help pay benefits for thousands of jobless workers.

Commission chair Senator John Watkins says that may depend on when the previously borrowed funds can be paid back. The panel is also concerned about whether employers' tax burdens will increase as a result. Watkins doesn't think that will be the case.

"Business is paying higher taxes now and we've also had to borrow," he says. "That decreases the deductibility of what they do pay. They're sort of being hit with a double whammy right now so I do not anticipate that we're going to add to the tax burden."

He's hopeful that since the state allocated $8.9 million for the interest payment, the balance can be paid before borrowing again next year.


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