State asks for federal loan to keep unemployment fund solvent

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The fund that pays for Wisconsin’s unemployment benefits could be $1.2 billion in the red by the end of 2010.

That’s according to a new projection from the state’s workforce development agency.

Wisconsin’s jobless rate is lower than the national average. But the December rate was still the highest in over 20 years at 5.8 percent.

For the first time since 1986, employers are paying higher taxes into the benefit fund this year. The fund now has $57.5 million, and the state has asked for a $400 million loan from the federal government to keep the benefits flowing.

The report also says more such loans will be needed, as year-end deficits in the benefit fund are now expected through at least 2013.

Phil Neuenfeldt, a member of the state’s Unemployment Insurance Advisory Council, says it’s “absolutely terrifying” what’s going on.

The federal economic stimulus package could provide some help. The Senate’s version of the stimulus bill would exempt interest on state unemployment fund loans.

And the Wisconsin Council on Children and Families says the House package has $44.5 million for the state’s jobless fund, plus more funding if the state made changes like covering part-timers.

Jim Buchen of the Wisconsin Manufacturers and Commerce group says it’s too early to consider major changes in business taxes into the fund.

Tags: wisconsin news, unemployment benefits, federal, help