The Wisconsin Department of Workforce Development said Wednesday that it is currently paying out more in unemployment benefits than it is taking in, forcing the state to borrow funds from the federal government.
In a briefing to a labor committee in the Legislature, DWD Secretary Roberta Gassman proposed delaying repayment of the $1.2 billion loan to give the economy more time to recover.
Gassman said the high number of companies relocating to other states is causing an increase in unemployment rates in Wisconsin. As a result, the amount the DWD paid out between 2007 and 2009 increased from less than $1 billion to $3 billion.
""[The labor] committee knows how important the unemployment insurance program is,"" she said. ""It is a lifeline to the workers who find themselves, through not fault of their own, out of work. And it helps them and their families survive.""
Gassman said the Unemployment Insurance Advisory Council, which produces and places bills before the Wisconsin Legislature, is not taking major steps to repay the debt at this time.
""They want to avoid actions that might slow the rate of recovery,"" she said. ""The Council feels that it is very difficult to consider issues such as benefit reductions at a time when so many families in the state are reeling with the impact of the recession.""
The Council said in a statement that as the recession eases, tax collection will increase until it exceeds the benefits paid out again. Although this allows the state to pay off the loan over time, under current Federal law, Wisconsin must begin paying interest on the outstanding loan balance beginning in 2011.
The DWD estimates that by the end of 2011, Wisconsin's debt owed to the federal government will be $2.39 billion.
The Council recommended the state begin paying off the debt as soon as possible, but said, ""at this point in the economic cycle employers and laid off employees are not in a position to shoulder an additional economic burden.""
