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FIRST ON FOX: A House Republican is moving to rein in California’s ballooning unemployment insurance debt, arguing employers are being stuck with the bill as the state fails to repay what it owes.
Rep. Vince Fong, R-Calif., will introduce legislation on Tuesday that would require California to pay its outstanding $21 billion loan to the federal government before spending federal money on other programs.
Under Fong’s bill, California would have to direct eligible federal funds toward repayment within five business days of the money becoming available. If it violates that provision, the state would have to pay the full amount of misused funds to the federal government.
California is the only state that has not paid back its loans for a COVID-19-era program that helped states finance a surge in claims for unemployment benefits with federal money. Instead, the state’s federal unemployment debt continues to climb and is projected to top $23 billion by the end of the year, according to CalMatters.
Democrat Gov. Gavin Newsom is facing GOP criticism for failing to repay a pandemic-era loan that has forced the state’s employers to pay higher taxes to help service the debt. (Tayfun Coskun/Anadolu via Getty Images)
Fong argues the failure to pay off the massive debt has been detrimental to the state’s employers, who have been forced to help repay the loans through automatic tax hikes. Businesses were forced to pay an extra $42 per employee on their federal payroll taxes this year to help service the unpaid debt, KCRA reported.
The California Republican has sharply criticized Gov. Gavin Newsom, D-Calif., for not prioritizing repayment of the debt despite a near $100 billion budget surplus in 2022. Instead, California Democrats continued funding infrastructure projects, homelessness initiatives and other priorities, including subsidized health insurance for illegal immigrants.
Newsom has since signed a budget scaling back taxpayer-funded healthcare for illegal immigrants amid the state’s growing fiscal challenges.
Fong, a former state legislator, tied the massive unemployment debt to broader concerns about the Golden State’s budgeting decisions.
“Fraud and mismanagement aren’t isolated incidents in Gavin Newsom’s California — they’ve become systemic failures with real consequences,” Fong said in a statement. “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.
Rep. Vince Fong, R-Calif., left, is taking aim at the Golden State’s massive $21 billion unemployment insurance debt that accumulated under Gov. Gavin Newsom, D-Calif. (Bill Clark/CQ-Roll Call, Inc. via Getty Images; Justin Sullivan/Getty Images)
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Fong’s bill comes as California’s unemployment benefits system faces federal scrutiny over allegedly weak fraud safeguards.
In February, then-Department of Labor Secretary Lori Chavez-DeRemer unveiled a “strike team” to probe fraud and abuse in California’s unemployment insurance program.
The Department of Labor referenced reports from the California State Auditor that found the state’s unemployment insurance program was high risk due in part to “inadequate fraud prevention and claimant service” and warned the system’s fraud prevention efforts were “marked by significant missteps” that may have resulted in billions of dollars in fraudulent payments.
Thousands of California inmates, including those on death row, participated in an unemployment benefits fraud scheme that cost the state up to $1 billion, CNN reported in 2020. Prosecutors at the time dubbed it “the largest ever taxpayer fraud to occur in this state’s history.”
In recent months, California has also been rocked by allegations of widespread fraud in the state’s social services programs, expanding scrutiny beyond the unemployment system.
The Trump administration announced last week that it would withhold $1.3 billion in federal Medicaid funding to California, citing fraud concerns among the state’s myriad hospice providers.
Centers for Medicare & Medicaid Services Administrator Mehmet Oz, right, and Vice President JD Vance, left, announced an unprecedented freeze in Medicaid payments to California, citing fraud concerns. (Daniel Heuer/Bloomberg via Getty Images)
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“The simple reason is because the state of California has not taken fraud very seriously,” Vice President JD Vance said in a White House news conference.
A spokesperson for Newsom did not immediately respond to a request for comment.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: moxie.foxnews.com
