California's unemployment insurance fund will have a $2.4 billion deficit by the end of 2009 and be $4.9 billion in the red by 2010 if changes are not made to how benefits are financed, the state Employment Development Department warned Friday.
In their October forecast, EDD officials said the UI Trust Fund will collect $15.2 billion in payroll taxes from California employers over the next three years.
However, the fund will pay out more than $22 billion to the unemployed who apply for benefits as the state grapples with rising unemployment, already at a 12-year high.
The department hinted that the deficit may balloon even higher because the latest forecast is based on the June labor market outlook.
Since then, "California economic conditions have worsened," EDD said, citing UCLA Anderson forecasts that suggest the economy will deteriorate through 2009 before a slow recovery begins in 2010.
Fixing the fund is one of the issues Gov. Arnold Schwarzenegger wants the Legislature to consider in next week's special session. Six months ago EDD predicted that the unemployment insurance fund would have a deficit of $1.8 billion by the end of 2009, rising to $3.5 billion by 2010.
Assembly Speaker Karen Bass said the latest projections offer policymakers "another stark reminder of the economic problems facing the nation and our state."
Bass said the Assembly is committed to ensuring that the fund has "enough money" to help Californians facing temporary job loss. The average worker gets $307 a week in benefits, though it can be as much as $450.
Art Pulaski, the California Labor Federation's secretary-treasurer, urged legislators to boost employer contributions that finance the fund, saying they've underpaid for 25 years.
"The Legislature and administration need to take swift and responsible action to bring the UI fund back from the brink," Pulaski said in a statement.
Call The Bee's Andrew McIntosh at (916) 321-1215.
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