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MADISON, Wis. - Benefits paid to suffering unemployed workers will have
to be cut and taxes on struggling businesses will have to go up to pay
for a staggering number of claims due to the recession, Wisconsin
lawmakers were told Wednesday.
However, no benefit cuts or tax increases will be recommended to the
Legislature this year, Department of Workforce Development Secretary
Roberta Gassman told the Assembly's Labor Committee.
A council made up of business and labor representatives that advises the
department recommended against taking action now for fear it could
disrupt economic recovery and due to uncertainty with how Congress may
act.
"Neither employers nor laid off employees are in a position to shoulder
an additional economic burden at this time," said the letter sent March
4 to chairs of the state Senate and Assembly Labor committees. It was
co-signed by council members Phillip Neuenfeldt, secretary- treasurer of
the state AFL-CIO, and James Buchen, vice president of government
relations for Wisconsin Manufacturers and Commerce.
Wisconsin ran out of money to meet the skyrocketing unemployment and
demand for unemployment benefits and began borrowing from the federal
government more than a year ago. Thirty-one other states are also
borrowing because state money is tapped out.
In 2007, before the recession started, less than $1 billion was paid to
the unemployed in Wisconsin who were eligible for up to 26 weeks of
benefits.
In 2009, benefits could be tapped for up to 93 weeks and the state paid
out $3.1 billion, more than triple what it did two years prior.
Wisconsin's debt to the federal government is expected to double from
the roughly $1.2 billion that is owed now to nearly $2.4 billion by
2014, said Hal Bergan, administrator of Wisconsin's unemployment
insurance program.
Paying that off will require both a reduction in benefits and higher
business taxes, Gassman said.
Businesses are already being taxed more.
The amount of wages that could be taxed went up this year and is
scheduled to go up again in 2011 and 2013. Overall tax rates also
increased in 2010 and businesses will be subject to a special assessment
starting in 2011 to begin paying off the interest on the money borrowed
from the federal government, the advisory council letter to lawmakers
said.
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Associated
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