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Minn. Unemployment Fund Headed For Deficit

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Jan 9, 2009 7:42 am US/Central

Minn. Unemployment Fund Headed For Deficit

ST. PAUL (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.

(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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