RICHMOND— Virginia Gov. Ralph Northam says the Commonwealth will commit $935.6 million in funding from the American Rescue Plan to protect employers from paying higher unemployment insurance taxes.

The plan will put $862 million back into Virginia’s unemployment insurance trust fund which will halt tax increases on businesses while ensuring employers are not penalized for layoffs during the COVID-19 pandemic.

Virginia pays unemployment benefits from its Unemployment Insurance Trust Fund financed through payroll taxes paid by employers. When higher numbers of workers are laid off and apply for unemployment insurance, taxes on businesses increase based on a formula to help replenish the trust fund.

Gov. Northam also said that Virginia will invest $73.6 million to fast-track “ongoing modernization efforts” at the Virginia Employment Commission which will include:

  • $37.4 million to boost call center capacity
  • $29.8 million to upgrade technology
  • nearly $4.6 million to hire additional adjudication officers
  • $1.8 million for personnel support

Governor Northam and the General Assembly have also worked together to support out-of-work Virginians in need of assistance and speed up the processing of unemployment claims.

The special session budget included $210 million to backfill the Unemployment Insurance Trust Fund and the 2021 budget dedicated an additional $15 million to increase call center staffing levels and support long-overdue IT system upgrades at the Virginia Employment Commission.

Virginia’s unemployment insurance system distributed $12.9 billion in benefits to more than 1.3 million eligible Virginians between the start of the pandemic in March 2020 and May 2021.