Governor Reynolds. (file photo)

Governor Kim Reynolds is using nearly 40 percent of the federal coronavirus relief money Iowa received to cover unemployment benefits.

She’s depositing $490 million dollars into the state’s Unemployment Insurance Trust Fund. Iowa Association of Business and Industry president Mike Ralston says it’s “a big announcement” that will save Iowa businesses over $400 million.

“Businesses would have paid more in unemployment insurance taxes, so that there would be money in the Unemployment Trust Fund to pay unemployment claims,” Ralston says.

If the balance in the state’s Unemployment Trust Fund runs low, the taxes business pay into the fund are increased.

“I think it’s too early to say whether this is a one-time thing or whether there will need to be additional money,” Ralston says. “but it’s a huge effort to try to stop that from happening.”

In a written statement, Reynolds said she decided to use federal CARES Act money to minimize the pandemic’s impact on businesses, so they can focus on “growing and reinvesting” rather than paying more taxes.

Iowa’s unemployment rate in May was 10 percent.