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When the pandemic first started, most Californians flocked to the state's Employment Development Department (EDD) for unemployment benefits. But as the agency tried to handle the influx of claims and phone calls, phony pandemic benefit claims flooded their system.
Now, California has a debt of nearly $20 billion, which is about as much unemployment debt as all other states combined, according to a report from CalMatters. In Governor Gavin Newsom's proposed budget he allocated $3 billion of the state's $21 billion surplus to go toward paying off the debt.
According to CalMatters, even before the pandemic, the U.S. Department of Labor named California's unemployment system the least financially stable system of all 50 states.
To start paying off the debt, CalMatters reports that federal law will automatically increase the federal taxes California employers pay in 2023 by $21. That tax will continue to go up by an additional $21 per employee every year until the debt is repaid, which could be in the early 2030s if there's not another recession before then.
However, business groups believe the state should chip in $10 billion dollars to help pay off the debt. They pointed out that many other states used federal COVID relief funds to help pay off their unemployment debt.
To read the full report, click here.