Gov. Charlie Baker filed a nearly $1.6 billion supplemental budget on Wednesday, most of which would be used to provide unemployment insurance relief for employers, which he says is critical to help businesses recover from the COVID-19 pandemic.

The legislation relies on a roughly $5 billion budget surplus based on better-than-expected tax revenues.

“Thanks to careful management of the commonwealth’s tax revenues and strong economic activity, Massachusetts has an unprecedented surplus at the close of fiscal year 2021, and this legislation ensures those resources are put to work to support local economies and small businesses,” the Republican governor said in a statement. “Our proposal to provide employers with unemployment insurance relief is fiscally responsible and would provide much-needed support for businesses and workers across the commonwealth.”

Driven by pandemic-related claims, the state’s Unemployment Insurance Trust Fund, which is funded by a payroll tax on employers, is expected to be $4 billion in the red by the end of next year, according to state figures.

The governor’s proposal to provide $1 billion to the fund would relieve employers’ future obligations. Business groups have been lobbying for help with the unemployment insurance burden.

The supplemental budget bill would also finally implement the income tax charitable deduction — first approved by voters nearly 20 years ago — helping charities and nonprofits who supported vulnerable populations through the pandemic.

The proposal requires legislative approval.