California owes the federal government billions of dollars after borrowing funds to pay unemployment benefits in the middle of the pandemic.
California's debt is forecast to grow beyond the $24.3 billion estimated for the end of this year. According to the Los Angeles Times, business leaders said Friday that as borrowing from the federal unemployment trust fund is paid back by higher payroll taxes, state officials must tap more of a projected budget surplus to lessen the financial hit on employers already struggling to recover from the economic shutdown of the last year.
The report, released this week by the state Employment Development Department, poses a new challenge for Gov. Gavin Newsom and legislators after months of unresolved problems with the unemployment system.