Jan 10, 2009 10:36 pm US/Central
Minn. Jobless Fund To Go Broke In About A Year
(WCCO)
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It's likely that the state will have to borrow funds from the federal government, raise taxes or cut benefits.
State of Minnesota/CBS
A report out Friday said the nation's unemployment rate rose to 7.2 percent last month. The latest numbers for Minnesota had the unemployment rate at 6.4 percent for November. That translates into more than 11 Million Americans without jobs and about 200,000 Minnesotans looking for work.
That means many more people collecting unemployment benefits from the state, including Rosemount resident Tom Kroeten.
Kroeten spends about four to six hours everyday hitting the internet to find a new job. He was laid off from his information technology position in November.
"It is frustrating, you try not to get -- you have to keep a positive attitude about it, because if you're putting yourself the competition of course increases for a smaller pool of jobs," said Kroeten.
At least Kroeten prepared himself. He knew a layoff may be coming earlier in the year and cut his spending. The state of Minnesota tried to prepare for this recession as well, by beefing up its unemployment benefit fund over recent years. But it hasn't been enough. The fund is expected to run out of money by late his year or early 2010.
"The state will have to borrow from the federal government to pay its unemployment insurance benefit obligations," said Tom Hesse, Vice President of Governmental Affairs for the Minnesota Chamber of Commerce.
If the borrowing lasts more than a couple of years, it could lead to higher taxes for Minnesota businesses. It's a possibility that worries the Minnesota Chamber of Commerce.
"Employers are hurting and adding more costs really does not help the situation," added Hesse.
It's also possible the state could cut benefits. Tom Kroeten is hoping his stint on unemployment doesn't last that long. He's optimistic he'll find a job within the next couple of months.
"What else can you do except keep plugging away and looking," said Kroeten.
On Monday, state senate committees will discuss a proposal to extend state unemployment benefits. It would affect about 3,000 Minnesotans who have been disqualified from a federal benefits extension.
The state passed similar legislation in 2002, but there is concern this will put even more stress on the state's jobless fund.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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