Prop Zero
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Unemployment Insurance Deficit Might Be Worse Than Budget

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    NEWSLETTERS

    If you think the state's persistent annual budget deficits -- estimated at nearly $20 billion for the next few years -- look bad, then check out the state's unemployment insurance fund.

    An update on the fund, released this week by the state's Employment Development Department, projects a deficit in the account of more than $20 billion by the end of next year.

    Why the deficit? The state is paying out more in unemployment benefits than it receives in payroll taxes (which provides the cash for the fund). The unemployment benefits fund began borrowing from the federal government in January 2009 to pay benefits. California is supposed to pay that money back, but officials here and in other states are hoping the feds will eventually forgive these loans. (That expectation has fanned fears about federal deficits, which is why U.S. Senate Republicans said they voted against funding for unemployment benefits this week.

    California has more than two million unemployed workers.

    (/blogs/prop-zero)