Just when the state didn't need any more bad news about a struggling economy, it got some more Sunday.
The Wisconsin State Journal reported that Wisconsin's reserve fund for paying jobless claims could slip into insolvency by next spring.
That could force the state, for the first time since the early 1980s, to borrow money from the federal government to pay jobless claims by laid-off workers. A state projection shows continued high jobless claims could leave the fund $6.2 million short by the end of March 2009.
The state government has tried to head the crisis off at the pass. A law signed by Gov. Jim Doyle in March will boost the fund's reserves starting next year, but not until April. How are they doing it? By significantly increasing the taxes being paid into it.
In the meantime, the fund will have to weather the winter months, with the highest rate of jobless claims and lowest tax revenues for the fund.
Since the law's passage, jobless claims in the state have increased by more than 5 percent.
The state is certainly facing a tough stretch, and should think of a solution other than to borrow from the federal government. The loan would be interest-free if paid back by September.
Robbing Peter to pay Paul and every other person with a jobless claim is not the best idea.
State Department of Workforce Development Secretary Roberta Gassman oversees the unemployment program. She's concerned about a May forecast that said Wisconsin's unemployment rate of 4.6 percent could increase to 5.6 percent in 2009.
"Should we see these newer levels of unemployment continue at this kind of rate, there might be some additional action that the state would take to make sure the fund continues to be strong," Gassman said.
The department can't abruptly stop paying benefits to workers because of the shortage, but the state Legislature can take action. It could reduce benefits or raise taxes paid into the fund.
While either solution may not be perfect, they're better than asking for a loan, even if it is interest-free, with a catch.
Where would the money to pay back the loan come from? Watch out Peter.
The Wisconsin State Journal reported that Wisconsin's reserve fund for paying jobless claims could slip into insolvency by next spring.
That could force the state, for the first time since the early 1980s, to borrow money from the federal government to pay jobless claims by laid-off workers. A state projection shows continued high jobless claims could leave the fund $6.2 million short by the end of March 2009.
The state government has tried to head the crisis off at the pass. A law signed by Gov. Jim Doyle in March will boost the fund's reserves starting next year, but not until April. How are they doing it? By significantly increasing the taxes being paid into it.
In the meantime, the fund will have to weather the winter months, with the highest rate of jobless claims and lowest tax revenues for the fund.
Since the law's passage, jobless claims in the state have increased by more than 5 percent.
The state is certainly facing a tough stretch, and should think of a solution other than to borrow from the federal government. The loan would be interest-free if paid back by September.
Robbing Peter to pay Paul and every other person with a jobless claim is not the best idea.
State Department of Workforce Development Secretary Roberta Gassman oversees the unemployment program. She's concerned about a May forecast that said Wisconsin's unemployment rate of 4.6 percent could increase to 5.6 percent in 2009.
"Should we see these newer levels of unemployment continue at this kind of rate, there might be some additional action that the state would take to make sure the fund continues to be strong," Gassman said.
The department can't abruptly stop paying benefits to workers because of the shortage, but the state Legislature can take action. It could reduce benefits or raise taxes paid into the fund.
While either solution may not be perfect, they're better than asking for a loan, even if it is interest-free, with a catch.
Where would the money to pay back the loan come from? Watch out Peter.
