California is the most-populated state, so it's no surprise that during the recent economic downturn, it had for several years one of the highest unemployment rates in the United States.
The California Employment Development Department reports that more than 750,000 people in the state currently are collecting unemployment benefits. The average Golden State worker who has lost a job gets up to $450 week.
But because there have been so many out-of-work Californians, the state has had to borrow money from Uncle Sam to issue the checks. It is not alone. The unemployment programs in 32 states needed similar bailouts from Washington.
But now California's fortunes are improving. A Los Angeles County Economic Development Corp. report released in July found that the state's economy has come back over the last 18 months with growth that has outpaced the nation. California's gross state product grew by 3.5 percent last year, well above the U.S. gross domestic product rate of 2.2 percent. California also added more nonfarm jobs at a faster rate than did the United States overall.
Taxes to repay benefits loan
All this good economic news has prompted Gov. Jerry Brown to talk about paying back Uncle Sam for the $10 billion it lent California to keep unemployment benefits checks flowing.
The governor's goal is to erase the debt by 2016 and then bank an $11 billion cushion for future unemployment benefits to Californians who lose their jobs.
Where will the repayment-plus money come from? More payroll taxes paid by employers.
The key proposal is to raise the decades-old amount of earnings subject to the employer-paid 6.2 percent unemployment payroll tax. The Los Angeles Times reports that the amount of wages subject to unemployment insurance taxes would increase from the first $7,000 of annual pay to $9,500 and eventually to $12,000.
Brown is hoping that the California Assembly will approve the business tax increase before it wraps up its session on Sept. 13.
You can bet that in addition to hearing from the governor, California lawmakers will hear from the state's businesses.
The corporate consensus is that a bit more in unemployment taxes is necessary.
But in return, businesses want California to toughen requirements on who qualifies for benefits. They also would like for it to be harder for part-time employees to get the checks. And companies want a reduction in the total amount of benefits that workers can collect.
There's also some support for a bond issue to raise the money to repay the unemployment benefits debt.
The goal is to win approval of some type of unemployment benefits package before the legislature finishes work for the year on Sept. 13.
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Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and a co-author of the e-book "Future Millionaires' Guidebook."