California can't even pay for unemployment benefits
"The deficit that California looks like it is facing is staggering," said Bud Bridger, fiscal officer for the unemployment insurance program.
To rebalance the system and pay back the federal loan, lawmakers must raise payroll taxes on employers, reduce benefits for recipients, or both.
In 2009 and 2010, the state expects to pay out $29 billion in benefits. It will collect just $11 billion. Counting the small positive balance that was in the fund at the end of 2008, the result is a $17.8 billion deficit at the end of 2010.
State leaders have seen the problem coming.
Unemployment insurance is funded primarily by a payroll tax that costs employers up to $434 per employee, per year. That formula hasn't been changed since 1985.
Meanwhile, the current maximum jobless benefit of $450 per week was increased to that level in stages starting in 2002.
In November, Gov. Arnold Schwarzenegger proposed a tax increase on employers and benefit cuts to recipients to fix the fund."