• BREAKING NEWS ABC shows live and on-demand -- Download the WATCH ABC app!

Calif. turns to loans to pay unemployed

January 27, 2009 8:28:52 AM PST
Unemployment is rising in California, but the fund that pays the jobless is broke, forcing the state to borrow money from the federal government so it can continue paying unemployment benefits.The Employment Development Department (EDD) said it would need nearly $2.4 billion to stay solvent though the end of the year.

California's unemployment rate grew to 9.3 percent last month, the highest in 15 years.

Several years ago, lawmakers approved a bill that raised weekly unemployment benefits substantially, but employer taxes were not adjusted to cover the additional cost.

The EDD had warned that the unemployment fund would eventually run out of money without an increase of revenue.

If no steps are taken to fix the fund's revenue shortage, its red ink is projected to grow to $4.9 billion in 2010.

The dilemma adds one more problem for lawmakers to deal with as they try to come to terms on California's budget.

The state fund paid out $6.8 billion in unemployment benefits in 2008, up from $4.9 billion in 2007. The 2008 total doesn't include federal unemployment funds that covered an extension of benefits authorized by Congress.

The Associated Press contributed to this story.


MORE LOCAL HEADLINES FROM LOS ANGELES

USEFUL LINKS:
SEND TIP || REPORT TYPO || TWEET @abc7 ||  WIDGET


Load Comments