California’s unemployment rate may have dropped to a record low 4.3 percent in December, but the state’s employers are still paying for jobless benefits paid out during the Great Recession in the form of a special tax due at the end of this month.
Little wonder anyone who can leave does.
The tax repays a federal debt incurred when the state’s unemployment insurance fund, which is funded entirely by employers, went negative in 2009 and the federal government began paying benefits to laid-off Californians.
Even though the loan debt peaked at $10.2 billion in 2012 and has been whittled down to just $1.2 billion, every year the tax goes up, thanks to a convoluted formula that perplexes and infuriates many employers.
Other state funds took on this debt during the recession, but California and the U.S. Virgin Islands are the only places still paying it off.
“The worst part is, we don’t know until January” what the tax for the previous year will be, said Susan Thomas, a payroll specialist with Professional Small Business Services in Vacaville. The tax bill comes in early January and must be paid by Jan. 31. “It’s a surprise to our payroll clients,” she said.
The San Francisco Chronicle reports that this year the bill, for 2017, works out to $147 for each employee who made at least $7,000 last year, up from $126 per worker in 2016.