Questions, answers on Virginia's jobless benefits

The debate over whether Virginia should accept $125 million in federal stimulus aid to pay for jobless benefits is likely to rage right up to Election Day and beyond.

Democrats say expanding eligibility to more displaced workers in the midst of a recession is morally justified and would bolster the economy. Republicans say the action would raise taxes on businesses, discouraging job creation.

The complexity of the issue and the partisan tenor of the debate have generated mountains of misinformation and a cascade of confusion. Some unemployed men and women already receiving aid incorrectly fear they will lose their benefits. Some business owners hold false hope that they can avoid tax increases this year if eligibility is frozen.

In an effort to encourage educated discourse over the coming months, here is a primer on the topic.

How many Virginians are receiving monthly unemployment checks now?

According to the Virginia Employment Commission, 101,371 people received benefits last month.

Can workers who quit their jobs or who are fired for misconduct collect benefits?

Workers who leave their jobs voluntarily without good cause cannot collect benefits. The Virginia Employment Commission determines whether good cause exists, such as ongoing discrimination by the employer. The burden of proof is on workers to show they exhausted all reasonable alternatives for resolving an issue before quitting. Workers who quit to start their own businesses are disqualified.

Workers can't collect assistance if they are fired for misconduct, such as failing a drug test, committing a crime or being chronically absent or tardy. Also, those who are collecting benefits must consistently demonstrate that they are actively seeking a new job.

How would eligibility change if Virginia expanded its benefits to qualify for stimulus funds?

Laid-off workers enrolled in job training programs approved by the state or the federal Workforce Investment Act would receive up to 26 additional weeks of benefits if they needed them to complete their coursework. The expansion would apply only to people with no prospect of returning to their old jobs, either because they worked in a declining industry, such as textiles, or their former employer made a permanent reduction in operations.

A larger number of part-time workers would become eligible for benefits. They would be allowed to collect benefits even if their job search was limited to other part-time jobs, not full-time employment.

How many new people would get benefits with those changes, and what would it cost?

The Virginia Employment Commission identified 6,867 part-time workers and 1,043 people in training who would be added, at a cost of less than $20 million a year.

Could students who quit their summer jobs to return to classes get benefits?

Typically no, because they are voluntarily ending their employment. Amusement parks are worried, however, that they would face higher taxes for seasonal workers whose jobs end when the parks close each year.

Will businesses pay higher taxes if eligibility is expanded?

If the state legislature leaves the expanded benefits in place, businesses will see an average tax increase of $1.71 per employee annually in 2011. The amount would peak at $4.73 per employee per year in 2012 before declining.

Aren't unemployment insurance taxes going up already?

Yes. Businesses pay taxes into a special fund that pays for unemployment benefits. When that fund runs low, taxes automatically increase to replenish it. Businesses currently pay an average of $98 per worker each year, but that tax is forecast to rise to $155 next year and $218 in 2012. The exact amounts will depend on the number of people needing benefits in future months. Any future tax increases tied to expanded eligibility would be on top of those increases.

Would those tax increases have been delayed if Virginia had taken the $125 million from the stimulus package?

Probably not. Nearly 300,000 Virginians are now unemployed, and the state is spending about $100 million a month on benefits. The unemployment fund is already so low that $125 million won't be enough to avoid automatic triggers to increase business taxes.

However, if the legislature increased eligibility, then rolled it back within a couple of years, the $125 million might slightly reduce the size of tax increases on businesses, according to VEC calculations.

Do the changes in eligibility have to be permanent?

No. The U.S. Department of Labor has said Virginia can collect $125 million in federal stimulus money if it passes a state law expanding eligibility. The law cannot have an automatic cut-off date when eligibility would be rolled back. However, labor officials have said the state would not be penalized if legislators repealed the law.

Will people already eligible for benefits lose their monthly checks now?

No. They will continue to receive assistance based on current law.

Why is this still an issue? Hasn't the legislature already voted?

The General Assembly voted to reject the $125 million in April, but the issue has taken center stage in this year's gubernatorial and legislative elections.

Did the federal government give Virginia's $125 million to other states?

No. Virginia has until 2011 to request the funds, so the legislature has time to change its mind.

Won't the House reject the benefits again if the issue comes up next year?

Republican leaders in the House say they will not accept the stimulus money unless Congress waives the requirement that eligibility be expanded. Democrats are betting that they will either seize control of the House or defeat enough Republicans that GOP leaders will reconsider their position. The House now consists of 53 Republicans, 45 Democrats and two independents.

Republicans say they did accept some federal money for unemployment benefits. Is that true?

Republican and Democratic legislators all voted to extend benefits for up to 13 weeks for workers who already qualify for aid. The federal government will pick up 100 percent of the cost. That extension is in addition to two other extensions enacted by the federal government because of high unemployment. The maximum period a worker can collect benefits is now 72 weeks. Virginia also received $62.8 million from the federal stimulus for jobless aid without any vote by the legislature.

Will Virginia businesses move to other states if their taxes go up?

If they move because they want to pay lower unemployment insurances taxes, they'll have to relocate to South Dakota or Mississippi, the only states with lower tax rates. North Carolina's tax, in comparison, averages $342 per employee annually, more than three times Virginia's existing rate.

What is the average unemployment tax and benefit amount nationwide?

The national average tax rate is $285 per employee per year. Virginia's average tax rate is currently $98. The average national weekly benefit is $300.