States OK to Cover Jobless Aid, Delay Tax Hikes with Federal Aid

States are tapping into their COVID-19 aid to cover the massive cost of unemployment benefits paid out during the pandemic, following a directive from the U.S. Treasury.

States have borrowed more than $50 billion from the Treasury since March 2020 to provide jobless benefits, after depleting $75 billion they held in pre-pandemic unemployment reserves. Some have delayed automatic tax hikes on employers triggered when those funds exhaust.

Treasury earlier this week indicated that states can use any of the $350 billion the American Rescue Plan sent their way to recoup their reserves and avoid tax hikes, and repay their federal ...