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LAO calls California's unemployment insurance financing "broken," recommends reforms and refinancing
Summary
The Legislative Analyst's Office told the Senate subcommittee that California's unemployment insurance financing is structurally unstable, with an outstanding federal loan near $21.6 billion and recurring annual shortfalls; the LAO proposed raising the taxable wage base, simplifying tax rates, changing experience rating, and a combined state/employer refinancing plan.
Chaz Alamo of the Legislative Analyst's Office told the subcommittee that California's unemployment insurance (UI) financing system is structurally unsound and that the state faces a large outstanding federal loan and recurring shortfalls.
Alamo presented LAO analysis showing California's outstanding federal UI loan is approximately $21.6 billion and that the state has made no net progress repaying principal since the pandemic. He said the LAO estimates the state is likely to collect roughly $2 billion less in…
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