One of the consequences of the recession is a $10 billion dollar deficit in California’s Unemployment Insurance Fund (UI). California had a record number of people on unemployment at the height of the downturn and had no choice but to borrow funds from the federal government.
Gov. Jerry Brown’s Administration is focused on paying down this debt as soon as possible and building a reserve against future downturns. Administration officials have been meeting with stakeholders to explore programmatic changes. The Administration has proposed raising the taxable wage base from $7,000 to $12,000 and raising the tax rate. This would, according to the Administration’s projections, wipe out the deficit and create a surplus of $11 billion or more by 2021.
With concern about the effect on the economy, employer groups have proposed different concepts for altering the wage base and tax rate, the amount of surplus and time to reach it, and reforms to UI benefits. WGA is not expecting any significant movement to be made on UI this legislative year, but we are anticipating this to be a big issue next year. Staff will be providing regular updates as the discussion continues.
Please contact WG’s Matthew Allen at (916) 446-1435 if you have any questions or would like additional information.
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