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Virginia's businesses will pay higher unemployment taxes next year. Date published: 8/21/2011
BY CHELYEN DAVIS RICHMOND --Virginia's businesses will pay higher unemployment taxes next year as the state tries to refill its depleted unemployment trust fund.But leaders hope the 2012 tax rates are the highest businesses will see, and that taxes will drop in future years as the fund recovers from the recession's high levels of unemployment. In an update to the state Commission on Unemployment Compensation on Friday, Employment Commissioner John Broadway said unemployment rates are improving, but employers will see their average unemployment tax peak next year at $229 per employee. That's up from $99 per employee in 2008. The tax is intended to replenish the fund from which unemployment benefits are paid, so the lower that fund gets, the higher the tax. And even though unemployment rates have improved, it will take several more years to refill the fund. "It'll be a long time before we get back to 2008," said state Sen. John Watkins, R-Chesterfield, chairman of the commission. The fund, in fact, was depleted months ago, and Virginia has been borrowing money from the federal government to keep unemployment benefits flowing. Since October 2009 that amount has totaled $569 million, but much of that has been repaid. The fund was $126 million in the hole as of earlier this month, Broadway said. That's better than the $347 million negative balance the fund had back on Jan. 1. Broadway said he hopes to see the unemployment fund back in the black by June of 2012, when he predicts it could have about $160 million. But he still thinks the state will have to go through another round of federal borrowing, and expects to borrow an additional $251 million between this September and April of 2013. That's because the taxes coming in to build back the fund still won't be enough to refill it. At one point, the federal government waived interest on money that states had borrowed to pay unemployment benefits. But that waiver has expired, and Virginia owes $20 million in interest payments for 2011 and 2012. Broadway said the state plans to pay about $12 million in September. Virginia already repaid $358 million of the money it has borrowed, back in May, Broadway said. The state plays to repay another $300 million next May, and make a final $70 million payment in May 2013, he said. Chelyen Davis: 804/343-2245
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