XPost: alt.california, alt.fan.rush-limbaugh, alt.society.liberalism   
   XPost: talk.politics.guns   
   From: unqualified.black.cunt@splcenter.org   
      
   On 06 Sep 2021, jthomq@gmail.com posted some   
   news:sh5bfk$vld$2@news.dns-netz.com:   
      
   > Jonathan wrote   
   >   
   >> Democrats are idiots.   
      
   Leaving $18.5 billion obligation to the federal government unpaid is not   
   only fiscally imprudent, it harms employers   
      
   By committing not to tap $36 billion in state reserves amidst declining   
   tax revenues, Gov. Gavin Newsom appears to be taking a fiscally prudent   
   stance in 2023-24 budget negotiations. Unfortunately, Newsom does not plan   
   to repay the $18.5 billion California owes the federal government for   
   state unemployment insurance benefits it covered during the COVID-19   
   crisis.   
      
   Leaving this balance unpaid is not only fiscally imprudent, but harms   
   California employers.   
      
   After COVID-19 struck in March 2020, 22 states took federal unemployment   
   loans. But by the end of 2022, all but four of these states had repaid   
   their federal debts. Illinois cleared its balance in January 2023, leaving   
   only Connecticut, New York and California on the hook.   
      
   To repay the loan, the federal government is now charging California   
   employers $42 extra unemployment tax per employee this year. It will ramp   
   up the extra tax by an additional $21 each year until the balance is   
   zeroed out. The Legislative Analyst expects the loan to be fully paid off   
   in 2029 or 2030, unless another recession hits the state in the interim.   
      
   The tax surcharge, which should top out at around $168 per employee per   
   year, may seem small, but it comes on top of California’s already high   
   employment costs. The state has a relatively high minimum wage of $15.50   
   per hour, which applies not only to affluent areas but also to   
   economically challenged regions such as the High Desert and Central   
   Valley. California’s minimum is higher than that of all adjacent states,   
   and employers cannot count a portion of employee tips toward the state   
   minimum as they can in Arizona.   
      
   One reason California has so much unemployment debt relative to other   
   states is that it failed to clamp down on widespread unemployment fraud   
   during the pandemic. According to the state’s Employment Development   
   Department, this fraud resulted in the payment of $20 billion in   
   unwarranted unemployment compensation, an amount close to the state’s   
   outstanding loan balance. An independent estimate from the Lexis/Nexis   
   governments division placed the losses at $32.6 billion or more.   
      
   California also had the opportunity to use American Rescue Plan Act (ARPA)   
   funds to pay off the loan but devoted only $250 million of the $27 billion   
   it received from the federal government for this purpose. This contrasts   
   with Hawaii, which used $800 million of the $1.6 billion in ARPA funds it   
   received to fully extinguish its federal unemployment loan by early last   
   year. Arizona, Colorado, Minnesota and Nevada are among the states that,   
   relative to California, committed much larger proportions of their ARPA   
   grants to repaying their federal unemployment loans and/or building up   
   their state unemployment trust funds to avoid future borrowing.   
      
   California also could have used its large FY 2022-23 surplus to pay off   
   the loan, but instead used the money for other priorities. Now, with   
   revenues flagging, the Newsom administration has decided to cancel plans   
   to pay $750 million of the $18.5 billion loan balance in FY 2023-24 and to   
   use $500 million in general fund money to offset the unemployment tax   
   increase now being faced by small employers.   
      
   The administration seems to think it can get the federal government to   
   cancel part of the loan. When Assemblymember Vince Fong, R-Bakersfield,   
   asked Erika Li, chief deputy of budgets at California Department of   
   Finance about administration plans for the unemployment loan at a recent   
   budget hearing, she responded, “we continue to lobby at the federal level   
   … in regards to forgiveness.”   
      
   This is not a plausible strategy. Senators from the 47 states that do not   
   have outstanding loan balances will wonder why the other three states   
   should get special treatment, and the GOP-led House, which is now   
   investigating California unemployment insurance fraud, will not be doing   
   us any favors.   
      
   Instead, the Legislature should consider drawing down state reserves to   
      
   [continued in next message]   
      
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