Tuesday, December 1, 2009

Virginia Borrows $1.26 Billion To Pay Unemployment Claims

Via Mish and originally at Hampton Roads PilotOnline.

The Commonwealth will tap into funds borrowed from the US Treasury, which was arranged in September by outgoing Governor Tim Kaine.  The funds will carry interest payments of about $36.7 Million.  The last time this kind of borrowing was necessary was in 1983.  From the article:

The state's average unemployment tax per employee will jump from $95 this year to $171 in 2010 and to $263 by 2012, the VEC said in a Sept. 29 presentation to the Commission on Unemployment Compensation.

For small retailers, the financial pressure from weak sales and higher unemployment taxes could be intense....[t]he deficit in its unemployment-benefits fund will hit $194 million by the end of this year and balloon to $561 million by the end of 2010, the Virginia Employment Commission said.

Two dozen states, including North Carolina, South Carolina, New York and Texas, have already borrowed about $21 billion from the federal government to pay jobless benefits, according to the Labor Department.

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