California employers could be hit with big tax bill for jobless benefits, auditor warns

The L.A. Times reports:

California employers could face an annual payroll tax increase of as much as $6 billion if California's unemployment insurance program fails to repay a federal government loan that has kept benefits flowing.

The warning came in a critical state audit of the California Employment Development Department, which distributed $22.9 billion in unemployment benefits last year.

The report concludes that for a decade, the EDD "has consistently failed to perform" at a level the U.S. Labor Department "considers acceptable regarding its timely delivery of unemployment benefits," State Auditor Elaine M. Howle wrote in a letter to the governor and legislators.

The unemployment insurance fund, insolvent since January 2009, relies on federal loans to pay jobless benefits. The debt is expected to hit $13.4 billion by the end of this year unless state lawmakers and the governor agree to raise payroll taxes, cut benefits or do some combination of both. An interest bill of $362 million is due in September.

Just another reason for businesses not to expand or leave California.