Virginia Gov. Tim Kaine on Tuesday asked the federal government for a $252 million loan to cover jobless benefits for 69,000 out-of-work Virginians through the end of the year. The loan is needed to keep the unemployment insurance trust fund from running dry as employers shed jobs. Kaine said the fund is on track to be depleted by mid-October. “The stresses placed on our unemployment compensation program reflect the stresses placed on many Virginians who have been swept up in the worst economic crisis in generations,” Kaine said. “Virginia will take advantage of every available resource to help citizens who lost their jobs through no fault of their own get through these difficult times.” With the trust fund dwindling, an automatic tax increase on employers will start in January, sharply increasing the per-employee contribution to $171 per year. The current tax, $98 per employee, is among the lowest in the nation. That change is accompanied by a dramatic cut in unemployment benefits for Virginians who also receive Social Security, Kaine said. Those who receive checks from both programs will see their unemployment payment cut by 50 percent of the amount of their Social Security payment. The announcement that the state’s unemployment trust fund is approaching insolvency was not unexpected. Republicans and Democrats in the legislature sparred earlier this year over whether to accept $125 million from the federal stimulus package to replenish the fund. House Republicans blocked the money, which came with strings that would have required the state to expand the number of people eligible for benefits. Accepting the stimulus funds would have delayed the loan request only until January, according to the governor. He said Virginia would join 19 other states who have asked the Department of Labor for loans. Virginia’s unemployment rate dropped slightly in July to 6.9 percent from 7.1 percent the month before, seasonally adjusted. The figure is still 2.9 percentage points higher than the same month last year.
