Virginia’s unemployment system, atrophied due to low unemployment over the past several years, and inattention from the past two governors, Terry McAuliffe and Ralph Northam, was obviously ill-equipped to handle the surge in unemployment claims that were received due to the pandemic.
Approximately 1.4 million Virginia have filed for unemployment benefits this year, more than 10 times the number of claims that were filed in 2019, which has left the Unemployment Insurance Trust depleted.
The special session budget adopted in the fall included $210 million to backfill the Unemployment Insurance Trust Fund, which is currently borrowing federal dollars to pay out benefits.
Northam’s proposed revised state budget that will go in front of the Virginia General Assembly next month includes nearly $15 million to support technology upgrades and additional customer service staff at the VEC.
Northam on Tuesday directed the Virginia Employment Commission to immediately begin distributing benefit payments to UI applicants whose claims have been delayed in the determination process.
The VEC will continue to adjudicate claims for eligibility. If deemed ineligible, applicants will be required to return the funds pursuant to state and federal law.
“The Virginia Employment Commission remains focused on providing relief for Virginia businesses and workers during these unprecedented times,” VEC Commissioner Ellen Marie Hess said. “These actions will ease the burdens on families and businesses and help our economy grow.”
Temporary changes to Virginia’s unemployment insurance program announced Tuesday by Northam will require the VEC to mitigate a potential rise in the UI experience rating tax for businesses by holding them harmless for lay-offs that occurred during the pandemic.
The temporary change will protect Virginia businesses from having to pay an additional $200 million to replenish the Unemployment Insurance Trust Fund.
UI Employer Tax Rates for 2021 are assigned by the previous calendar year from July 1, 2019, to June 30, 2020. Employers receive a Base Tax Rate, dependent on their particular account history and circumstances.
In recalculating the tax rate for 2021, Executive Order Seventy-Four requires that the VEC not penalize businesses for lay-offs that occurred during the pandemic from April through June 2020. This will prevent Virginia’s struggling businesses from having to devote resources to higher state payroll taxes.
“It has been a long road to recovery for our workers and small businesses, and the winter season will bring its own set of unique challenges,” Chief Workforce Development Advisor Megan Healy said. “Bold action is required to ensure that Virginians have the resources they need to keep their heads above water and our economy moving forward. I am proud that the Commonwealth is further strengthening its UI program, which has already served as a lifeline to countless Virginians since the start of the pandemic.”
“This relief is absolutely critical for business owners across the Commonwealth, many of whom continue to struggle as a result of COVID-19,” said State Del. Lamont Bagby, chair of the Commission on Unemployment Compensation. “Today’s actions will save over $200 million for Virginia’s employers and provide a much-needed boost for small businesses, workers, and our economic recovery.”
Story by Chris Graham
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