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States tap federal aid to shore up empty unemployment funds

Gavin Newsom
Posted at 12:34 PM, May 27, 2021
and last updated 2021-05-27 15:34:38-04

Businesses could be spared billions of dollars of higher taxes in coming years as a result of federal coronavirus funds flowing to the states.

An Associated Press review has found that governors and lawmakers in more than half the states are planning to use at least part of their federal pandemic relief aid to bail out unemployment insurance trust funds that have been drained by surging benefit claims.

By tapping federal aid, states could avoid automatic tax hikes that otherwise would be imposed on businesses to repay federal loans that have kept state unemployment systems afloat.