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Republican representative denounces Newsom's mismanagement, proposes bill to force California to pay unemployment insurance debt

The legislation would require states with outstanding federal unemployment insurance debt to pay it off before allocating any additional federal funds they receive for any other purpose. Eligible funds include future federal flexible funds, such as those from the CARES Act or the American Bailout Plan.

Gavin Newsom in New York/ Timothy A. Clary

Gavin Newsom in New York/ Timothy A. ClaryAFP.

Williams Perdomo
Published by
Williams Perdomo

Republican Congressman Vince Fong introduced a bill aimed at containing the rising unemployment insurance debt in California, noting that employers are ending up shouldering that burden because California has not covered its financial obligations.

Specifically, his office explained, this legislation would require states with outstanding federal unemployment insurance debts to pay them off before putting any additional federal funds they receive toward any other purpose. Eligible funds include future federal flexible funds, such as those from the CARES Act or the American Bailout Plan.

"Fraud and mismanagement aren’t isolated incidents in Gavin Newsom’s California, they’ve become systemic failures with real consequences," stated Congressman Fong.

"What was intended to be a lifeline for unemployed workers during the pandemic has now left California with more than $18 billion in unpaid federal unemployment insurance debt. Rather than using the state’s past $98 billion budget surplus to pay down that debt, Sacramento shifted the burden onto employers through automatic payroll tax hikes. Enough is enough. My legislation restores accountability, protects our local small businesses and farmers, and prevents California job creators from being punished for Sacramento’s negligence," he added.

California's Debt

According to the representative's office, California remains the only state in the country with an outstanding federal unemployment loan balance, which now exceeds $18 billion.

The representative argued that, in his view, California has a history of mismanagement, such as the Newsom administration's "pay now, check later" approach during the pandemic, which eliminated traditional eligibility safeguards and fostered massive fraud, including:
  • At least $32 billion in fraudulent payments coming from the California Employment Development Department.
  • Thousands of inmates, including murderers, rapists, and death row inmates, received as much as $1 billion in unemployment benefits.

What does the CAL Reimbursement Act provide for?

  • Requires states with outstanding federal unemployment insurance advances to earmark eligible future federal funds, such as those from the CARES Act or the American Recovery Plan, for repayment within five business days before spending them for any other purpose.
  • It prohibits states from earmarking flexible federal funds for other purposes as long as there are outstanding unemployment debts.
  • Establishes a strict enforcement mechanism: states that violate the requirement must reimburse the federal government for all misappropriated funds in full within five business days.
  • It applies prospectively to certain federal funds awarded as of the date of enactment.

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