Virginia lawmakers vote to forgive $18 million in unemployment insurance overpayments

(Ned Oliver/ Virginia Mercury)

The General Assembly passed legislation Saturday that would forgive an estimated $18 million in unemployment insurance claims the state says it erroneously paid out amid the pandemic and has since been attempting to claw back.

The bill’s sponsor, Del. Sally Hudson, D-Charlottesville, said it was unfair to send collections notices to low-income Virginians to make up for errors caused by the state. As a result of the legislation, she said the Virginia Employment Commission will send a notice in July to people who have received overpayment warnings since March of last year.

“If those people can show economic need and that they were not at fault for their overpayment, that overpayment will be forgiven,” she said.

Virginia is one of just 11 states that doesn’t forgive any overpayments, according to the U.S. Department of Labor.

As initially passed by the House, the legislation would have continued to forgive the overpayments after the pandemic ends. But lawmakers in the Senate opposed making it a permanent policy, agreeing only to the measure if it expired on July 1, 2022.

Senate lawmakers also attached a sunset clause to language in the bill that would have permanently barred the state from cutting off benefits after they had started without first holding a hearing. Gov. Ralph Northam has used his executive authority to temporarily implement a similar policy.

Hudson told her colleagues she was disappointed by the amendments. Lawmakers in the Senate, who passed the bill on Saturday morning, presented it as a good compromise.

The amended version also shifts the source of the money for repayments from unemployment insurance payroll taxes paid by employers to the state’s general fund, a step aimed at avoiding increasing those business’ tax liability.

Republicans largely opposed the measure and, in the Senate, praised their Democratic colleagues for working to at least rein in the bill.

“Our colleagues from the Senate fought to make sure sunset provisions applied to the whole bill,” said Sen. Mark Obenshain, R-Rockingham, who called it an “academic approach to a very real practical problem” that he doubted would “really work so well in the real world.”

Hudson said she had hoped that the mistakes made during the pandemic would result in lessons learned and improved policies for the future.

“People who don’t have to interact with public benefits programs forget just how hard they are to navigate,” she said. “That’s why I think it’s urgent — in this moment when one in six Virginians has had to interact with this broken system — to build back better for the future.”