California's unemployment insurance fund will be $2.4 billion in the red by the end of 2009 and $4.9 billion in the hole by the end of 2010 if changes are not made to how unemployment insurance benefits are financed, the state Employment Development Department predicted on Friday.
In their October forecast, EDD officials said the state unemployment insurance fund is expected to collect $15.2 billion in payroll taxes from California employers over the next three years.
However, the fund will pay out $22.4 billion to the unemployed who apply for benefits as the state grapples with an unemployment rate at a 12 year high.
The Department hinted that things will actually get worse because the latest forecast is based on the department's June 2008 labor market outlook.
Since then, "California economic conditions have worsened," the department said, citing more recent economic forecasts that suggest the state's economy will get worse through 2009 before a slow recovery begins in 2010.
In May, the EDD forecast that the Unemployment Insurance Trust Fund would have a deficit of $1.8 billion by the end of 2009, rising to $3.5 billion by 2010.
Call The bee's Andrew Mcintosh at (916) 321-1215
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