By WisBusiness Staff
The state won’t have to cut unemployment benefits or increase taxes on employers this year. But action will be necessary down the road to pay back Wisconsin’s current debt to the federal government incurred to cover its unemployment insurance shortfall, the state labor secretary told an Assembly panel Wednesday.
“I think some future action is going to be needed,” DWD Secretary Roberta Gassman told the Assembly Labor Committee in a hearing on the UI fund.
For now, however, she said the state’s Unemployment Insurance Advisory Council has elected to “take a cautious approach,” hoping to avoid actions that might slow the economic recovery and to wait for potential federal action on unemployment — including another extension of unemployment benefits through the end of the year.
In order to cope with the increasing unemployment rate and adjustments from Washington, Gassman said DWD now administers seven programs to cover up to 93 weeks of benefits, totaling some $3 billion in payments to 575,000 Wisconsinites. She said in 2007, one 26-week program cost under $1 billion, and that just 355,000 claims are processed in a typical year.
That increase has translated to a $1.2 billion debt to the federal government from the state, and the agency projects that debt to increase to just shy of $2.4 billion at the end of next year. In 2012, projections show revenues beginning to realign with demand as the economy recovers.
The secretary acknowledged that “resolving the solvency issue is going to take some concessions on both sides of the ledger” on the UI council, which includes representatives of labor and management groups.
For now, however, the department recommends neither benefit concessions nor increased payroll taxes.
“We’re in a very dynamic environment,” UI administrator Hal Bergan told the committee. “You can make better policy when things have flattened out.”
