The Wisconsin unemployment insurance fund is projected to have a nearly $3 billion deficit by the end of 2011, the state announced this week.
A representative from the Division of Unemployment of the Department of Workforce Development presented the report to the Assembly labor committee on Tuesday. The figure is double the estimate from earlier this year.
Dick Jones, agency liaison at the Department of Workforce Development, said in an e-mail that the deficit has come as a direct result of the current economic recession.
According to Jones, DWD has experienced record unemployment claims over the last year.
With so many people claiming unemployment benefits, the state had to borrow from the federal unemployment insurance fund. That loan is interest-free through next year, but after that, a deficit will begin to accumulate.
Despite the large projected deficit, Jones said, the economy will not be affected negatively because the unemployed will still be able to purchase necessities.
""When individuals receive benefit checks, they spend the money in their communities. The benefits help them buy groceries, make mortgage or rent payments and meet other basic needs and expenses,"" Jones said.
Also on Tuesday, the Wisconsin Department of Revenue released its quarterly economic outlook.
The report indicated there will be more job losses and incomes will continue to fall in the early part of 2010. These figures, however, are expected to recover later in the year.
""We think [the job market] is getting close to stability right now,"" John Koskinen, chief economist at the Wisconsin Department of Revenue, said. ""The big losses that we saw are fading.""
According to Koskinen, the job market is expected to expand in 2010, and the growth could happen at a 2 percent rate.
""We've lost so much, so fast, we probably won't get full recovery until 2012,"" Koskinen said.
Koskinen said he does not foresee any tax increases because of the unemployment rate.
