To make up the shortfall, states borrowed money from the U.S. Treasury. California's loan with the feds now tops $10 billion. Gov. Jerry Brown wants to fix that, retiring the federal debt by 2016 and creating an $11 billion surplus by 2021.
With one of the nation's highest unemployment rates for several years, the state has had to borrow money from the feds to keep the program going. Now that the jobless rate has fallen to 8.5%, Brown would like to start paying down a $10-billion debt.Catch that? Paid for wholly by employers.
His administration is circulating a draft bill that would put the system on an even keel by raising payroll taxes paid by employers. The goal is to win approval before the Legislature finishes work for the year Sept. 13.
That's not the way it's being done in some of the other 19 states that borrowed money from the treasury to cover the shortfall. Check out, where else, North Carolina. There Republicans are showing every day what they would do nationally on a range of issues if they could get away with it.
Earlier this year, the North Carolina legislature cut the maximum unemployment compensation to $350 a week to pay down the $2.1 billion it borrowed from the feds. The goal is to pay off that debt by 2015. The state will also charge businesses an added $42 a year for each employee. But 74 percent of the $3.6 million the state will save between now and 2017, according to the legislature's fiscal research office, will come from cuts in workers' weekly compensation checks. Having a tough time making ends meet? Here, let us make it tougher still.
In California, Marc Lifsher reports that Marty Morgenstern, a Brown adviser who is secretary of the Labor and Workforce Development Agency, has been holding separate meetings with business groups and labor unions on the change. Talks are in early stages and the details of what's being proposed now could change markedly before it is approved. But the proposal as it is currently set up would increase the amount of wages subject to unemployment insurance taxes from the first $7,000 of annual pay to $9,500 and eventually $12,000.
Paying down the federal loan that way and making the fund more solvent for future needs makes a good deal more sense than forcing the jobless to take a cut in their weekly compensation checks.