California Has $18.9 Billion in Unemployment Debt. Companies Will Have to Pay More in Taxes to Cover the Cost

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Twenty-two states borrowed from the federal government so they could keep paying unemployment benefits during the coronavirus pandemic. Those states must pay that money back, plus interest.

The tax increase won't be a significant burden for Duncan this year because she only has two employees. But she said it angers her she's stuck paying for something that wasn't her fault after the government ordered many businesses to shut down during the pandemic.

Instead of paying off its unemployment debt, the Democrats in charge spent the money on other things. They gave $21.4 billion of it back to taxpayers, sending three rounds of stimulus checks to help people weather the pandemic and offset rising gas prices. The rest of it went to things like public schools, roads and bridges, health care and homelessness programs.

Legislative Analyst Gabriel Petek, whose nonpartisan office advises the Legislature on budget issues, told lawmakers earlier this year that even if the state were to restore the $750 million payment toward the debt, it would not lower taxes for businesses because the the tax rate only changes if the debt is paid in full.

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