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States Tap Federal Aid To Shore Up Empty Unemployment Funds

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California Gov. Gavin Newsom speaks at Hanzo Sushi Thursday, April 29, 2021, in San Fernando, Calif. Businesses could be spared billions of dollars of higher taxes in coming years as a result of federal coronavirus relief funds flowing to the states. Newsom announced a budget plan this spring that would use $1.1 billion from the latest federal COVID-19 relief law to bolster a depleted unemployment compensation accounts. (AP Photo/Marcio Jose Sanchez, file)

(AP)–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.

 

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