(Source) As you would expect, California’s unemployment insurance fund is bleeding money:
“(OC Register) California’s unemployment insurance trust fund is bleeding money with state officials estimating it will be $27.3 billion in the hole by the end of 2011, according to a new state forecast.
Officials already were projecting major deficits in the fund a year ago, before the full impact of the banking crisis hit in late 2008. The fund’s losses accelerated this year as the country plunged into its deepest recession in 70 years with California’s unemployment rate hitting a modern-day high of 12.3% in August.
Employers, who support the fund through a tax on each worker, are expected to contribute $4.3 billion this year but that is nowhere near the $12.5 billion that is projected to be paid out in benefits. After eking out a $326.2 million surplus in 2008, the trust fund is expected to be $7.4 billion in the red by the end of this year.”
As if we needed any additional future burdens.
Just to keep checks coming, California has had to reach into Uncle Sam’s pockets for some $4.7 billion to date. The state must return what it borrows by 2011 — or face hundreds of millions in interest payments that would come at the expense of funding for schools, parks and social services. . . . That interest is accruing at 5 percent annually. By late 2011, California’s bill on interest alone could approach three-quarters of a billion dollars, which the state would have to pay from its already-strapped general fund. . . . Schwarzenegger and two lawmakers — Assemblyman Joe Coto, D-San Jose, and state Sen. Denise Moreno Ducheny, D-Chula Vista — have called for increasing the taxes paid by employers. (Source.)