Will assembly committee dig a deeper hole in unemployment insurance fund?

The reverberation the recent Assembly Appropriations Committee vote on Senate Bill 799 will be heard far, long, and lasting should its members vote to advance it to the Assembly floor, just one step before sending it on to Governor Gavin Newsom’s desk.

“Of the nearly 3,000 bills introduced in the 2023 session of the California Legislature, this one, I believe, sets the high-water mark for audacity and insidiousness,” said John Kabateck, California state director for the National Federation of Independent Business, the nation’s leading small business association. “Raiding a broke state unemployment insurance trust fund by allowing workers who elect to go out on strike – not workers who lost their jobs through no fault of their own – just to make points with a few labor unions is one of the bigger derelictions of public policy duties elected officials are entrusted to uphold. And it will make bad matters terribly worse for our state’s number one job creators, small business.”

The big facts of the matter
Only employers, through their payroll taxes, pay into the state’s unemployment insurance trust fund so that those out of work through no fault of their own can collect benefits.

Thanks in part to the $30 billion in fraudulent claims paid out by the Employment Development Department during the pandemic, the trust fund needed to borrow from the federal government to keep the fund solvent and today owes the feds more than $18 billion in loan repayment. Twenty-two other states also needed to borrow, but all but two (California, New York) have paid the feds back. The legislature punted on its opportunity to use some of the federal bailout largesse (CARES and ARPA money) and its own surplus to pay down or off its trust fund loan. Small business owners will know in December how much higher their 2024 payroll taxes will be.

SB 799 would overturn more than 70 years of precedent by allowing workers who voluntarily leave their jobs to go on strike to collect UI benefits while on strike.

To add insult to injury, SB 799 began its legislative life as a bill on prison visitations, passed all its committees and house-of-origin deadlines before being hijacked, gutted and replaced with language adding unemployment benefits for striking workers. So much for open and transparent government.

More information can be found in this coalition letter of opposition.

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