U.S. in Recession

Minn. unemployment fund headed for deficit

St. Paul, Minn. — (AP) - Increased unemployment rates and shrinking payrolls are putting pressure on a fund that pays benefits to unemployed people in Minnesota.

State finance and labor market officials say that this year, the state expects to pay $1.3 billion in unemployment benefits. They project a year-end deficit of $34 million. The deficit is expected to grow - possibly reaching $1.2 billion by 2013.

After the 2001 recession, the Minnesota Legislature changed its tax structure to build a bigger fund in the event of an economic downturn. The thinking was to build the fund slowly, to avoid stress on struggling employers who pay into it.

Tom Hesse, a lead lobbyist for the Minnesota Chamber of Commerce, says no one imagined that economic conditions would deteriorate so quickly.

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Information from: St. Paul Pioneer Press, http://www.twincities.com

(Copyright 2009 by The Associated Press. All Rights Reserved.)