California Defaults on $18.6 Billion in Debt, Saddling Employers with the Expense

May 08, 2023

California’s recent decision not to pay back some $20 billion borrowed from the federal government to cover unemployment benefits during the pandemic will fall on the shoulders of employers, according to experts.

“The state should have taken care of the loans with the COVID money it received from the government in 2021,” said Marc Joffe, policy analyst at the Cato Institute—a public policy think tank headquartered in Washington, D.C., in a statement to the Epoch Times.

In the state’s proposed 2023-2024 budget, $750 million was allocated to start paying down the loans, until Governor Gavin Newsom nixed the provision in early January, leaving businesses in the state responsible for the loans, as mandated by federal regulations – so that the federal unemployment tax rate of .6 percent will increase by .3% per year starting in 2023 until the loan is extinguished.