How Cali businesses are paying deadbeat Gavin Newsom’s bills

Gov. Gavin Newsom has defaulted on California’s $20 billion COVID debt to the federal government — and local businesses will be stuck paying the bill, to the tune of thousands of dollars each year.

While our gallivanting governor has been touring abroad and running ads in Texas and Florida touting the excellence of California, he and his party once again have made life harder for business owners and employees who have to work for a living. 

They ignore the mass migration of businesses to other states, thinking no matter what they do, California companies will just accept what they are handed.

You might have heard that, in 2022, the state supposedly had a massive surplus of roughly $90 to $100 billion.

That was caused by high earners and their stock gains — as well as heavy federal spending in the early Biden years.

While Gov. Gavin was out crowing about the surplus, I had a novel idea: He should use the extra money to pay down debt. 

Our state currently owes about $450 billion, including pensions, when it should be near zero. 

Instead, Newsom and the Democrats who hold absolute power in the state legislature set up a “rainy day fund” of about $37 billion, and spent the rest on their left-wing dreams — “health care for all,” “climate change” and the like.

Here is where the employers of the state got taken. 

California handed out unemployment benefits like candy during the pandemic, even to self-employed individuals who didn’t pay into the federal unemployment system.

When everything was totaled, the state of California owed the feds $20 billion.

We’ve seen this situation play out before. 

California created another large debt for unemployment payments of $9.7 billion in the 2008 downturn.

Employers had to pay that back over many years. They only learned how much they owed each year when they filed their unemployment tax returns in January.

That’s when they had to write a check, due Jan. 31. 

The repayment rate grew every year to pay off the 2008 debt.

Employers never knew when the amount would be paid off until they were finally informed that the state debt was repaid.

This went on for about eight years.

What makes this situation different? First, California owes much more, at $20 billion. 

Second, we have no clue how much of the debt is due to rampant fraud in the Employment Development Department.

Julie Su, who ran the EDD, initially announced there had been an estimated $10 billion in fraud. 

Did she get fired for that gross incompetence?

No. She received a major promotion into the Biden Labor Department. 

Later, the estimate was revised up to a possible $31 billion.

Su became the US Department of Labor’s acting secretary, and stayed in that position despite never being confirmed by the Senate.  

She’s now failed up once again to work in the incoming Mamdani administration in New York City as “deputy mayor for economic justice.”

All told: $20 billion owed to the federal government, and $20 billion of fraud in California’s unemployment insurance program.

All the result of mismanagement by Gavin Newsom and his administration. 

One might argue that in 2023 the tab for an employer was only projected to be $21 per employee. If you had ten employees, that would only have been $210. 

But in 2030, the payment per employee is expected to be $189.

If you run a restaurant and have 50 employees, each making $7,000 (the federal unemployment-tax wage limit) for the year, you must write an additional check for $9,450.

That’s a chunk of change. 

If you must pay this out for the next eight years, you face a bill running into the tens of thousands of dollars overall.

All because Gavin and his crew didn’t clean up their own mess when given the opportunity. 

Many employers will see another reason to escape California — and to pick out their favorite new Texas BBQ restaurant, or best Florida fishing spot.

The amazing thing is Newsom & Co. think we’re all stupid and won’t figure out that they have forced these costs on us.  

If you’re a California worker, you will have fewer opportunities as employers cut jobs to meet the cost of California’s default.

If you’re a California employer, you should be on the phone to either your state assembly member or state senator to remedy this injustice. 

Or you could call a couple of people named Abbott and DeSantis.

Bruce Bialosky is the founder of the Republican Jewish Coalition in California and writes about financial issues.