Sandi Vito, acting secretary of labor and industry, told the Senate Appropriations Committee yesterday that the state might request about $250 million from the federal government, but that the amount was not firm.
Vito also said Pennsylvania could face a $1 billion deficit in the unemployment fund by the end of 2009, and that it would need additional federal loans if no action was taken to resolve the shortfall.
The interest-free federal loan, which officials expect the state to receive, would be repaid in 60 to 90 days, said Troy Thompson, spokesman for Vito's department. The loan would not be part of the economic stimulus bill, but under conditions set by that bill, federal loans to states are tax-deferred until 2010.
Thompson said the loan would not eliminate the possibility of an automatic tax increase in 2010, depending on the findings of the solvency report issued by the Labor Department at the end of the fiscal year in June.
"We need to look at the entire tax structure," Thompson said. "We need to get the fund back in position to sustain itself without borrowing."
Business leaders said yesterday that the state - whose unemployment benefits are among the most generous - should find an equitable solution for rebuilding the fund.
Gene Barr, vice president of government affairs for the Pennsylvania Chamber of Business and Industry, said workers in Pennsylvania were eligible to collect large severance packages and unemployment benefits. He said he also had heard of students who collected benefits after leaving summer jobs to go back to school.
"We don't want to cut benefits to those who truly need them, but Pennsylvania has the 10th-highest unemployment taxes in the country," Barr said. "I would be extremely cautious" about raising taxes.
