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California Once More Giving Business Owners the Shaft

While our gallivanting Governor Gavin has been vacationing in forbidden states and running ads in Texas and Florida touting the excellence of California, he and his party once again have given the short straw to our state’s employers. They completely ignore the mass migration of businesses to other states thinking no matter what they do businesses will just take what is handed to them.

You might have heard that supposedly the state has a massive surplus of roughly $90-100 billion. This is caused by high-earners and their stock gains. It happens regularly during good times. The receipts in 2023 from tax returns for 2022 will most likely plummet due to the stock market downturn.

While Gov. Gavin was out crowing about the surplus, my first thought was somewhat of a novel thought – use that money to pay down debt. That amount currently stands at about $144 billion when it should be near zero.
Instead of doing any of that they will reserve about $37 billion for a “rainy day fund” and spend the rest mainly on every Leftist’s primary idea of budgeting — $54 billon for climate change.

Here is where the employers of the state get taken. California handed out unemployment benefits like candy during the Pandemic. They provided unemployment benefits to self-employed individuals who did not pay into the federal unemployment system (FUTA). When everything was totaled, the state of California owed the FUTA system (the Feds) $19 billion.

We have seen this situation play out before. California created another large debt for unemployment payments of $9.7 billion in the 2008 downturn. Employers had to pay that back over many years. They only knew how much they owed each year when the unemployment tax return was filed in January after the completion of the year. At that time, the employer would be informed how much they owed. They are required to write a check due by January 31st. The repayment amount grew every year. Employers never knew when the amount would be paid off until finally informed that the debt was repaid. This went on for about eight years.

What makes this situation different? First, the amount owed is significantly larger at $19 billion. Second, why would employers be liable for paying out benefits for self-employed individuals who did not pay into the system and have no responsibility to pay back the debt? One could argue that the state paid the debt down by $1 billion so that covers the self-employed costs. We have no clue how much the debt was related to that because it is a secret. The bigger issue is the FRAUD that happened with the payouts.

You may remember that the head of the EDD initially announced that there was an estimated $10 billion in fraud. Did she get fired for this gross incompetence? No. She got a major promotion in the Labor Dept. of the Biden Administration. Then the figure was revised up to an estimated $20 billion in fraud.

$18 billion owed to the fund and $20 billion of fraud. Fairly similar amounts one might say. The debt is obviously caused by the malfeasance of Gavin and his administration. Given a surplus of $90+ billion, why would the state not pay off that debt and call it a day? Instead, they decided to spend it on their favored policy initiatives and stick the $18 billion of debt on the backs of innocent employers.

One might argue that in 2023 the tab for an employer is only projected to be $21 per employee. If you have ten employees that is only $210. But it is still not related to what you are responsible for regarding your employees. In 2030, the payment per employee is estimated to be $189. If you run a restaurant and have fifty employees making the $7,000 (FUTA wage limit) for the year, you must write an additional check for $9,450. That is a chunk of change. Of course, you could argue that with Joe Biden as President you could pay that off in 2030 with one of the new $10,000 Biden bills printed to deal with the inflation.

If you must pay out for the next eight years and have fifty employees at an average annual rate of $95 per year, that is $38,000 that an employer is going to be stuck with because Gavin and his crew did not clean up their own mess when given the opportunity. If you have 5,000 employees, this provides another excuse to escape California and pick out your new favorite Texas BBQ restaurant.

The amazing thing is Gavin and his crew think we are all stupid and would not figure this out. If you are an employer, you should be on the phone to either your Assembly member or State Senator and remedy this injustice.

Or you could call a couple of people named Abbott or DeSantis.