"The more we tax business, the less able they are to produce a product and drive more revenue back into the state," said Terri Cole, president of the Greater Albuquerque Chamber of Commerce. "There has got to be a better way to handle this problem than raising taxes on the business community at the most difficult time in our history."

Besides dealing with the insolvent unemployment fund, the Legislature and governor must resolve a potential $600 million budget shortfall next year because of lower-than-expected revenues. Tax increases and cuts in government programs and public education are likely to patch up the operating budget.

New Mexico's unemployment rate is at a two-decade high. The jobless rate stood at 7.9 percent in October. It was 4.5 percent a year ago. Roughly 75,000 people are unemployed, up 32,000 in the past year.

There's a balance of about $230 million in the fund that pays unemployment benefits. That's dropped from more than $500 million about 18 months ago and the fund is projected to run into the red by January 2011 if nothing is done.