California could create its own $600 weekly unemployment benefit

SACRAMENTO —  As the COVID-19 pandemic continues to damage the California economy, state lawmakers are weighing whether to provide a supplemental unemployment benefit with the extra $600 per week provided by the federal government expiring this month.

Assemblyman Phil Ting (D-San Francisco), the leader of a legislative working group, said there is support among Democratic lawmakers for providing up to $600 weekly to jobless Californians if Congress fails to act on extending the federal pandemic benefit.

“There are so many people who are relying on that money to pay rent, to buy food. I think the state has to do everything possible to help them pay their bills,” said Ting, chairman of the Assembly Budget Committee.

With the end of the federal supplement on July 25, state unemployment checks will go back to the weekly average of $340 unless the state or federal government restore supplemental benefits.

The money for any extended benefit would be borrowed from a federal trust fund that has already been covering the state’s costs of paying unemployment benefits to millions of Californians who lost jobs after the state ordered residents to stay home in March to stop the spread of the virus.

California has borrowed $6.5 billion from the federal trust fund to pay an unprecedented number of claims filed since March. The state borrowed $10.7 billion to pay unemployment benefits during the Great Recession a decade ago and only finished paying the money back in 2018 by raising taxes on employers.

Ting and 25 other members of the state Senate and Assembly, acting in working groups, raised the issue as part of a joint $100-billion stimulus plan that aims to protect Californians and spur job creation. An outline of the plan includes a proposal to “borrow from the federal government to bolster state unemployment insurance programs.”

The proposed stimulus plan will be provided to Gov. Gavin Newsom and an economic recovery task force created to address the effects of the pandemic-fueled recession in the state.

“Millions of Californians are suffering in this economic downturn, and Republicans in Washington, D.C. don’t seem to care,” Assembly Speaker Anthony Rendon (D–Lakewood) said as the stimulus plan was released.

Representatives for Gov. Gavin Newsom did not respond Tuesday to requests for comment on whether he would support the state providing supplemental unemployment benefits. Newsom said Friday that he is hopeful that House Speaker Nancy Pelosi will rally Congress to provide more financial help to unemployed Californians.

“I have deep confidence in her capacity to pull something off important, to pull something off that directly addresses the issue not just of unemployment insurance, but of getting checks in the pockets of those who have been impacted by COVID-19,” Newsom said.

On Monday, Republicans in the U.S. Senate proposed a package that would reduce the enhanced federal unemployment payments from $600 a week to $200 after some lawmakers argued the higher payments provided many low-paid workers with more money than they had received while working, providing a disincentive to return to work.

The proposal to cut the supplement to $200 would create a financial hardship for many low-income California families, according to a study released Tuesday by the California Policy Lab at UCLA.

The Senate Republican proposal is now subject to negotiations with House Democrats, who have proposed an extension of the $600 unemployment benefit.

California would not have to provide supplemental funds if the federal government restores the $600 payments, Ting said, but he said the state should step in if there is no help from Washington.

“We know that that money has been fairly critical in keeping the number of evictions lower than we had imagined,” Ting said. “The last thing we should do is exacerbate our homeless problem. We don’t need thousands more Californians on our streets today.”

Money borrowed from the federal unemployment trust fund is paid back with higher taxes on employers in future years.

The supplemental relief money approved by Congress meant the average weekly benefit for Californians was boosted to $940 starting in April, while those who received maximum weekly state benefits saw an increase to $1,050.

So far, California has paid some $50 billion in unemployment benefits since March, having processed 8.7 million claims from jobless Californians.

Boosting jobless benefits would come even as lawmakers from both major parties have criticized the operations of the state agency that approves claims and pays out unemployment benefits.

State Senate Republican Leader Shannon Grove of Bakersfield criticized Democratic lawmakers on Tuesday for canceling a committee meeting that would have allowed legislators to order an audit of the state Employment Development Department.

The audit was proposed in response to complaints from jobless Californians who have been unable to file claims for unemployment benefits because of clogged state phone lines and computer glitches.

“California Democrats killed an opportunity to audit the EDD, which would have helped millions of frustrated Californians,” Grove said. “This audit would have been an opportunity to get answers.”