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APA Comments on Virginia UI Trust Fund Replenishment

BY: Mike Linehan | 09/09/21

The APA Government Relations Task Force Unemployment Insurance Workgroup contacted the Virginia legislature to support H.B. 7001, which was later signed into law by Gov. Ralph Northam. Key provisions of the law include funding the Virginia Unemployment Trust Fund, which would keep employer unemployment insurance (UI) tax rates from quadrupling.

Support of H.B. 7001

Realizing the potential burden for payroll professionals should employer UI tax rates quadruple, the APA supported the use of a portion of federal funds allocated to Virginia by the American Rescue Plan Act of 2021 (ARPA)—$862 million—to be deposited into the Virginia Unemployment Trust Fund.

The APA supported the exclusion of retroactive UI tax implementation and maintaining UI tax rates at 2021 levels for 2022.

A Nationwide Trend

Virginia is not alone in using ARPA funds to cover the shortfall in state UI trust fund reserves. If states have outstanding Federal Unemployment Account (FUA) loans on January 1 of at least two consecutive years and on November 10 of the second year, they are subject to a credit reduction on their federal unemployment tax rate until the loan has been paid off.

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Mike Linehan is the Assistant Manager of Government Relations for the APA.