Leaving $18.5 billion obligation to the federal government unpaid is not only fiscally imprudent, it harms employers.
Gov. Gavin 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.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.
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.
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