Another California crisis: Unemployment fund facing $7.4 billion deficit

[Craftsman]

SACRAMENTO — Already grappling with one multibillion-dollar budget deficit, cash-strapped California now is facing a crisis in its unemployment insurance fund — source of the tens of millions paid each week to jobless residents.

Amid record unemployment, the fund will likely finish the year $7.4 billion in the red, according to the latest projections from the state's Employment Development Department. Just to keep checks coming, California has had to reach into Uncle Sam's pockets for some $4.7 billion to date.

The state must return what it borrows by 2011 — or face hundreds of millions in interest payments that would come at the expense of funding for schools, parks and social services.

But with unemployment expected to remain high as the economy slowly turns around, officials fret they won't be able to pony up on time. And to prevent the fund's shortfall from ballooning even further in the next two years, Gov. Arnold Schwarzenegger and the Legislature face a nettlesome dilemma: Cut back on benefits, raise taxes on employers or do both.

http://www.mercurynews.com/breaking-news/ci_13836894?nclick_check=1

[villager]

1. I wonder if we'll finally get people exiting California in big numbers....

...which may, ultimately, make the state more quasi-manageable...

[KamaAina]

2. It might -- but where would they go?

California is so much bigger than any other Western state that even a small number of "Californicators" equals a huge increase, relatively speaking, in the populations of Ore., Nev., Ariz., etc.

[villager]

3. Good question, but if the infrastructure here is now untenable for the current population

..where is it "tenable?"

It would have to be a number of different places, one supposes...

[LWolf]

4. It's possible.

My older son, still in CA, was laid off. He gave up his apartment in studio city, moved back to the AV with his old roommate to conserve costs, and went back to college. Still no job in sight, so unemployment is all he's got.

If he loses that, he'll join us up here.

Although, as a confirmed city boy, he wouldn't be happy long in rural oregon.

[villager]

6. Though I trust it's still going (reasonably?) well up there, amiga?

;-)

[LWolf]

9. We're okay.

Younger son is out on his own with SO, and they are hanging in there, although their hours have been cut enough at work to make it challenging.

I took 2 pay cuts and am surviving by not going anywhere, not doing anything, and not working on the many repairs and clean-ups necessary on this old place, all which require $$$.

My 71 yo mom wanted to refinance her mortgage to help her with medical bills; she lives on social security and a small dividend check, and her medical bills have been pinching. It turns out that her house now appraises at a little less than she bought it for in 2000.

We're hanging in there. And hanging out there. We spend time at each others' houses, rather than going to dinner, movies, etc., and we're getting by.

I hope things are okay down your way.

:hi:

[villager]

10. Hanging in here, too, despite some "work" "furloughs,"

..the falling apart of the newspaper biz on the journo side, etc...

Am hanging on a clear afternoon with a certain big pooch's *second successor* -- an older female Dalmatian, that youngest son found via a rescue group! :hi:

[LWolf]

11. 2nd successor?

What happened to the 1st?

I know you won't find it surprising to hear that I still think of that big pooch frequently, and with love. I did just yesterday, as a matter of fact; a DUer posted in the Oregon forum looking for a foster home for 2 cats. THAT I can't do; too many predators locally to make it safe to take in someone's cats.

These days my young dog is a mature 6 years old, and spends her time supervising the neighbors pit, who is an escape artist and spends most of her time over here.

Fortunately, while she doesn't listen to anyone, she is mild-mannered. She plays and she hangs out, but she does not chase chickens or horses, and she does not get aggressive when my girl establishes boundaries (come and play, but stay away from my mom.)

In this economy, the shelters are FULL of rescues around here. It's always good to hear that another found a home.

:hi:

[slackmaster]

5. Apparently nobody in government has a grip on the entire state budget all at the same time

:argh:

You'd think that this one would have been pretty easy to see coming.

[Nikki Stone1]

8. Oh, they foresaw it--they just let it happen.

It's a way of creating a crisis and the crisis will DESTROY the public sector in CA.

[OffWithTheirHeads]

7. Cut back on benefits, raise taxes on employers or do both.

The myth that employers pay for unemployment insurance. The simple fact, at least in the private sector, is that the only way my employer pays for anything is because he sells my labor for more than he pays me for it. Thus, it is I who performs the work that generates the income that gets paid into the jobless benefit fund. When my employer can no longer sell my labor for more than he pays out for my wages and benefits, he does not, out of the goodness of his heart, magnanimously reach into his pocket to pay for my jobless benefits, he simply lays me off and stops paying me altogether. Then, if I'm fortunate, I can collect a small stipend from the state because I generated enough income while I was employed to pay for unemployment insurance.

This social safety net allows me to scrape by until my labor is once again in demand. It also keeps me from having to rob banks to feed my family, a skill much better left to Wall Street as they have obviously figured out how to do it without going to jail.