Associated Press | File August

Virginia is now one of 19 states that have requested federal loans to shore up depleted unemployment trust funds.

RICHMOND -- Gov. Tim Kaine has asked the federal government for a $252 million loan to maintain Virginia's unemployment compensation program through the end of this year, underscoring the severity of the economic crisis and the needs of nearly 69,000 Virginians getting jobless benefits.

Kaine filed the loan request Tuesday with the U.S. Department of Labor. Kaine said the demand for unemployment benefits will push the state's trust fund below legally mandated solvency levels by next month, a milestone that also triggers a "fund-builder tax" requiring employers to increase their contributions to the fund.

"The stresses placed on our unemployment compensation program reflect the stresses placed on many Virginians who have been swept up in the worst economic crisis in generations," Kaine said. "Virginia will take advantage of every available resource to help citizens who lost their jobs through no fault of their own get through these difficult times."

Virginia automatically imposes a fund-builder tax on employers when the unemployment trust fund falls below 50 percent of the level deemed sufficient in the state code. The additional tax will take effect in January, increasing employer rates to about $171 per worker. Businesses now pay about $93 per employee, according to the governor's office.

Some unemployment recipients will have their benefits reduced when the mandatory tax takes effect. Jobless workers who get Social Security benefits will have their unemployment compensation reduced by 50 percent of their Social Security payments. That means a recipient who receives $250 from Social Security and $200 in unemployment would have the unemployment benefit reduced to $75.

Virginia joins 19 states that already have requested loans from the Department of Labor to shore up depleted unemployment trust funds. The federal government will waive interest accrued through the end of 2010 under terms of the economic recovery act passed earlier this year. But Virginia employers would face an additional tax of $21 per worker beginning in 2011 if the state maintains an outstanding loan balance.

Kaine's administration said the state could have delayed seeking the loan -- and postponed an additional federal tax -- by accepting an additional $125 million in federal unemployment assistance earlier this year. The Republican-controlled House of Delegates rejected the funds, because the state would have been required to expand eligibility for the unemployment program to cover part-time workers and those in retraining programs.

House Majority Leader Morgan Griffith, R-Salem, said the proposed expansion would have increased demand for benefits and exacerbated the problems that led Kaine to seek a federal loan.

"I think that the rates are going to go up substantially in the next two to three years to cover the unemployment that we're currently facing, which is much higher than was anticipated back in the winter," Griffith said. "I think creating a new class of recipients would have put more pressure on that, and I think we made the right decision long term for the commonwealth."