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California repays $1.4 billion federal loan for unemployment benefits

California has quickly repaid a nearly $1.4 billion...

Posted: May 21, 2020 10:52 AM
Updated: May 21, 2020 4:30 PM

California has quickly repaid a nearly $1.4 billion loan from the federal government used to fund a massive increase in unemployment claims amid the coronavirus pandemic.

The state had borrowed $348 million in April and nearly $1.1 billion in early May, according to US Department of Treasury and Department of Labor data. But the balance is now $0, according to the federal agencies.

During severe economic downturns, it's not unusual for states to turn to the federal government for loans to cover their share of unemployment insurance, which typically lasts up to 26 weeks. Nearly three dozen states borrowed funds during and after the Great Recession. By the time California fully repaid the federal government in 2018, the tab totaled $65 billion with $1.4 billion in interest.

The jobless are guaranteed to get their benefits regardless of whether the money comes from a state's unemployment trust fund or from a federal loan if the trust fund runs dry.

California was able to pay back the loan with revenue from employer-paid taxes to cover unemployment, said a state Employment Development Department spokeswoman.

'With this being the highest period for receiving annual employer contributions, we will continue to bounce up and down with solvency for a little while until the contributions slow down and benefit payments outpace that revenue on a more permanent basis,' she said.

The department has requested authority to borrow up to $10 billion between April and June. It only draws down what it needs at any given time and will not pay interest on any loans in 2020, thanks to a coronavirus relief bill Congress passed in mid-March.

California isn't the only state that has requested borrowing authority from the federal government. It's one of 10 states, along with New York, Illinois, Ohio and Massachusetts, that have asked for the ability to draw down a total of $42.8 billion between May and July, said a US Department of Labor spokeswoman. At the moment, only New York is borrowing, after taking a loan of nearly $51 million this week.

About 38.6 million Americans have filed first-time unemployment claims since the coronavirus pandemic began prompting states to issue stay-at-home orders and to shutter non-essential businesses in mid-March.

The Golden State has processed 4.7 million claims since outbreak started and paid a total of $12.3 billion in benefits, though not all of that bill is footed by the state. It includes the extra $600 weekly boost and benefits paid to gig workers and others that are both funded by the federal government as part of the $2 trillion Congressional relief package passed in late March.

However, the state is projecting that unemployment benefits will total $43.8 billion for the 2020-21 fiscal year, which begins July 1, up from its original $5.8 billion estimate. They payments will be primarily supported by federal funding, federal loans and employer taxes.

Federal and state spending on unemployment benefits totaled just under $126 billion, as of May 19, up from $12.7 billion at the beginning of March, according to Treasury Department data.

California Coronavirus Cases

Data is updated nightly.

Cases: 1114524

Reported Deaths: 18726
CountyCasesDeaths
Los Angeles3645207438
San Bernardino845311129
Riverside806761400
San Diego71648968
Orange696941554
Kern38316445
Fresno35973471
Sacramento33133546
Santa Clara30676463
Alameda27485499
San Joaquin24649503
Contra Costa22412258
Stanislaus20370416
Tulare19752303
Ventura18040174
Imperial15053353
San Francisco14445158
Monterey13886113
San Mateo13203169
Sonoma11428155
Merced10986176
Santa Barbara10922133
Kings1003886
Solano934980
Marin7518128
Placer577867
Madera571480
San Luis Obispo561835
Yolo419975
Shasta409542
Santa Cruz389827
Butte366459
Napa275717
Sutter263813
El Dorado19304
San Benito174115
Yuba173210
Lassen14803
Tehama143523
Mendocino138522
Nevada10189
Lake83218
Glenn8296
Humboldt7309
Tuolumne7088
Colusa6426
Mono4993
Siskiyou4951
Amador45016
Calaveras43421
Inyo28316
Del Norte2731
Plumas1770
Trinity1130
Modoc1110
Mariposa1042
Alpine420
Sierra170
Unassigned00
Chico
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Mostly sunny & dry weather is ahead for your Monday. The potential for showers will return to mostly mountain areas late Tuesday night through Wednesday .We'll be drying back out for Thanksgiving.
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