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California's Unpaid Loan Forces Hidden Tax on Employers

12/23/2025

37 5 Full Breakdown

Summary

Story summary

California lawmakers have not repaid a $20 billion federal loan for pandemic unemployment claims.
This leaves businesses to cover the costs, with an extra $42 per employee in 2026.
Critics, including Republican lawmakers, say Governor Gavin Newsom's funding decisions create a hidden tax on employers.
Lawmakers acknowledge the unemployment insurance system's long-running struggles and support reforms to stabilize it while protecting workers.

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Story summary

California lawmakers have not repaid a $20 billion federal loan for pandemic unemployment claims.
This leaves businesses to cover the costs, with an extra $42 per employee in 2026.
Critics, including Republican lawmakers, say Governor Gavin Newsom's funding decisions create a hidden tax on employers.
Lawmakers acknowledge the unemployment insurance system's long-running struggles and support reforms to stabilize it while protecting workers.