California’s unemployment insurance fund is $20 billion in debt, putting the state in a terrible position in case of a recession.

The deep debt — incurred during the COVID-19 pandemic as millions of people lost their jobs and the state borrowed money from the federal government for unemployment benefits — is on Gov. Gavin Newsom’s mind.

He cited it as a factor in his recent veto of a bill that would have allowed striking workers to be eligible for unemployment benefits, mentioning that the state is paying hundreds of millions of dollars of interest on the debt.

It’s also top of mind for businesses, which face an increase in required contributions toward the state’s unemployment insurance fund as a result. And it’s on the minds of those who are concerned about whether the state’s unemployment system can handle another crisis such as a pandemic or a recession.

The unemployment insurance fund had regular solvency issues even before the pandemic. Now the situation is more dire, with the Employment Development Department issuing a spring forecast that the debt — which the Legislative Analyst’s Office has said does not include the infamous unemployment fraud that mostly involved temporary federal benefits that the state doesn’t have to pay back — would grow to $19.7 billion at the end of the year. In addition, the state Legislative Analyst’s Office said this summer that for the first time during a period of job growth, it expects California’s unemployment insurance fund to have fewer contributions coming in than benefits being paid out.

“The administration’s forecast of a UI trust fund deficit adds urgency that may not have existed last year, making this one of the key issues facing the Legislature in the near future,” said Chas Alamo, principal fiscal and policy analyst for the Legislative Analyst’s Office.

But this is just one example of the ongoing battle among workers, labor and business in California, and how politicians have to navigate that tension.

Debt could cost California billions just in interest

It is difficult to gauge the urgency the governor and state legislators feel about the debt.

Southern California Democrats Sen. Anthony Portantino and Assemblymember Chris Holden, co-authors of the bill Newsom vetoed citing concerns over the size of the debt, declined to comment on the debt.

Alex Stack, a spokesperson for the governor, referred to Newsom’s veto of the bill as one way the governor is avoiding increasing costs for businesses. Another way, he said, is that “the state has been covering interest payments instead of pushing that cost to employers.”

“The administration’s forecast of a UI trust fund deficit adds urgency that may not have existed last year, making this one of the key issues facing the Legislature in the near future.”
— Chas Alamo, principal fiscal and policy analyst, Legislative Analyst’s Office

The required repayment of the debt has triggered automatic tax increases on employers, which under federal law are responsible for paying down the principal, while the state typically pays the interest. The governor last year proposed using $3 billion from a projected budget surplus to pay off some of the debt, but ended up paying only $250 million toward the principal. The state has since swung to a budget deficit, and this year paid $306 million in interest by borrowing from the disability insurance fund.

Alamo has forecast that depending on interest rates, the debt could cost the state anywhere from a total of $3 billion to $7 billion in interest payments for the next several years, possibly through 2033. The state also borrowed from the federal government for unemployment benefits during the Great Recession; that debt cost the state $1.4 billion in interest payments from 2011 until 2018, when it was paid off.

Longstanding fund problems

The California unemployment insurance fund’s solvency problems go way back.

The fund was solvent as recently as 2018 and 2019, but still below the recommended standard of having enough funds to distribute benefits for a year, according to Department of Labor data analyzed by the Century Foundation, a progressive think tank that advocates for equity in domestic and foreign policy. In 2017, and each year before that going back to 2009, the fund had been insolvent. The last time the state’s unemployment insurance fund met the standard was 1990.

The current debt has triggered a $21 increase per employee that employers must pay in payroll taxes starting this year. Employers’ rate will keep rising an additional $21 per employee each year until the state pays off the debt to the federal government, for a total of $945 per employee through 2031, according to projections by the Legislative Analyst’s Office based on the average state unemployment insurance tax rate.

“California’s business community is terribly concerned about our state’s unemployment insurance fund debt and the increased taxes it is bringing to businesses and will continue to bring for the next decade,” said Rob Moutrie, a policy advocate for the California Chamber of Commerce. “We believe all the factors affecting California’s unemployment insurance fund, including eligibility issues and EDD’s failures, must be considered when looking at the unprecedented debt.”

But others say the state’s system to fund unemployment has for years been structured to favor businesses in the first place.

“Big businesses haven’t been paying the true cost of unemployment for decades,” said Alissa Anderson, a senior policy fellow at the California Budget & Policy Center, who said she plans to speak with Portantino’s office about the issue. Anderson added that shifting unemployment insurance debt to the state, as businesses have called for, is “a backdoor tax break for businesses.”

The state’s unemployment fund is funded by a variable percentage tax, currently 3.46%, on employers based on the first $7,000 each employee earns, the minimum taxable wage base required by federal law — a base California has not raised since 1983. That same wage base also applies to employers of both high-wage earners and low-wage earners, even though high-wage earners are eligible for higher unemployment benefits when they lose their jobs. Other states have raised their taxable wage bases as high as 100% of average weekly wages; in states like Washington, the taxable wage base this year is $67,600.

“Big businesses haven’t been paying the true cost of unemployment for decades.”
— Alissa Anderson, senior policy fellow, California Budget & Policy Center

Economists say the fact that California’s taxable wage base has been the same for so long is one of the main reasons its unemployment fund is consistently underfunded or insolvent. Another reason is that the state has added benefits and eligibility over the years without adjusting how the system is funded.

“California never has sufficient funding,” said Stephen Wandner, senior fellow at the National Academy of Social Insurance and author of the book “Transforming Unemployment Insurance for the Twenty-First Century: A Comprehensive Guide to Reform.” Wandner called it “unreasonable… to have fairly generous benefits and extremely weak financing. It’s not sustainable.”

“The last time I checked, 1983 was about 40 years ago,” Wandner added. “What’s happened since then? Wages and prices have gone up every year.” In his book, Wandner recommends that states such as California should index their taxable wage base by setting it at 50% or more of the Social Security taxable wage base, or by indexing it to wage growth.

But Alamo, of the state Legislative Analyst’s Office, said that while the state’s wage base is lower than others, the percentage employers pay on that wage base is actually greater than the percentage employers in many other states pay on higher wage bases. “The amount contributed on behalf of workers is pretty middle of the pack,” he said.

Businesses want a working group

The state should take action to address the problems with the fund, said Jenna Gerry, senior staff attorney for the National Employment Law Project who covers unemployment insurance issues in California.

“People need to understand the historic nature of this, and that something needs to be done now,” Gerry said, adding that fixing the system is also an equity issue in a high-cost state. The state’s unemployment benefit has been at a maximum $450 a week since 2005. “Who can live on that in California?” Gerry asked. Gerry added that the state needs to fix the unemployment fund’s solvency issues before it can raise the benefit limit.

Bill Sokol, who teaches labor law at San Francisco State University, said the system to fund unemployment insurance hasn’t changed all these years because the business lobby is strong. Sokol also said labor is fighting for more pressing issues that affect employed workers, not unemployed ones.

“What companies pay for UI is never going to be a top priority for unions, but it’s a top priority for business,” Sokol said. “This leaves it to the politicians to decide it’s for the greater good” to fix the unemployment insurance system, he said.

“People need to understand the historic nature of this, and that something needs to be done now.”
— Jenna Gerry, senior staff attorney, National Employment Law Project

Lorena Gonzalez Fletcher, head of the California Labor Federation, agreed. She said that the governor has used the unemployment insurance debt “as an excuse” not to sign Portantino’s bill — which was cosponsored by the federation — but that she hasn’t “heard anything else” about how Newsom plans to address the debt.

There are different ways to “sculpt” a solution, Gonzales Fletcher said, including lowering the percentage all employers pay into the fund but bumping up what employers of higher-wage workers are required to pay.

That gets into the fact that employers of different sizes have differing concerns.

Small Business Majority, a national nonprofit organization that advocates especially for under-resourced entrepreneurs and small businesses, wants to address equity issues including the disproportionate effect the funding system has on smaller businesses.

Bianca Bloomquist, the organization’s California policy director, called the system “regressive” and said it will be important to gather data about its impact on small businesses. Bloomquist added that a well-funded unemployment insurance fund is vital because small businesses understand that “when a community is suffering (from unemployment), small businesses suffer.”

Meanwhile, CalChamber and other business groups in 2021 asked the governor to form a working group to address the fund’s debt and solvency issues.

Moutrie of CalChamber said there has been no meeting about the matter so far, but that he expects meetings to happen next year.

Stack, the governor’s spokesperson, said a working group has not been created, and that Newsom’s office had no comment on a possible push by business groups to discuss the issue.

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CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

William Kenneth Prater passed away at the age of 73 in Eureka on Sept. 17, 2023 after a brief illness. Bill was born in Los Alamos, N.M. on Oct. 12, 1949 to Harry and Phyllis Prater. He later moved with his family to Las Vegas, Nev. where he graduated from Clark High School in 1968. He was drafted into the United States Army in 1970 and served in the Panama Canal Zone and Ft. Lewis Washington until 1973. Bill remained in the Army Reserve until 1976.

Bill worked many jobs in his life, some of which included surveying, manufacturing, repair, and sales in electronics, telecommunications and computers. He completed his AA degree at College of the Redwoods in 1991 with a certificate in Electronics Technology. In 1996, he started working part time for Eureka City Schools as a Computer Lab Technician, helping students as computers were introduced into all of our lives. From 1999-2014 he worked full time for Eureka City Schools in Information Technology.

Bill enjoyed riding and maintaining his Harley Davidson motorcycle, always taking pride in it. He shared his skills in fixing many things for friends and family over the years, always careful in his work, though maybe never the fastest to finish. Bill loved watching all sports, especially car and motorcycle racing. He shared his interest in old movies and TV programs with anyone willing to listen. Anyone who knew Bill heard a joke or two!

Bill is survived by his wife Cindy, daughters Alicia Nguyen (Tony), Janine Adams (Ben), granddaughters Olive and Hazel Nguyen, his brother Larry Prater (Christine), sister Patty Mendes (Nick), sister-in-law Cheryl Hale (Tom). He is also survived by nieces and nephews Candice Woodbury, Nick Prater, Ian Prater, Justin Hale, Emma Barnes, Robin Rice, and Angela Mendes and their families. He was preceded in death by his parents and brother Phillip Prater.

The family would like to thank the staff at Providence St Joseph Hospital, Hospice of Humboldt, and Timber Ridge Assisted Living, and Ayers Family Cremation for Bill’s care throughout this time.

Sue, a longtime resident of McKinleyville, went to be with Jesus on Sept. 24, 2023, after struggling with chronic lung issues. Sue was born on New Year’s Eve, 1961 in Eureka to Arthur and Patricia Lundquist. Sue’s lifelong love of horses begin as a toddler, with riding the ponies at McKinleyville Shopping Center, pleading for her grandpa to pay for one more turn on the pony as it went round it’s chained path. This love of horses transferred over to all animals, with a special place in her heart for cats. Over the years, she took in many strays and wounded cats, nursing them back to health. She leaves behind her kitties — Skittles, Knuckles and Negan — who all have found good homes.

Sue was always spunky. Growing up, Sue was found tagging along with her older siblings, going horseback riding, playing down at the creek or making mud pies at the grandparents’ house in Redwood Creek Valley. Attending schools in Eureka, Sue graduated from Eureka Senior High School in 1980.

Sue’s kind and generous spirit was evident by her years of work as a home care worker. She went above and beyond for those she served. Her hobbies included her loving her fur babies, gardening, carpentry, bead work, crafting and agate hunting.

After several years together, in 2014, she became the devoted wife of Todd Johnston. Sue became Mom to Eric (Jenny), Christopher (Shalico) and Matthew (Heather) and daughter to Pat and Joe Leo. She is survived by brothers Tim DeFazio (Jeanette), Chris DeFazio (Judy); sister Laura Del Ragno; beloved nieces and nephews Scott DeFazio (Heather), Christen DeFazio–Jones (Ed), Evan DeFazio, Justin Dukes (Stephany) and Brooke; brother-in-law Patrick Johnston (Lauren); sister-in-law, Shellie Taylor (Darin); more loved nieces and nephews: Joshua, Savannah, Alexander, Kasidy, Makenzie, and Jeremiah; grandchildren-Caleb, Kadence, Mariah, Lashyla, Jayden, and Braden. Sue is also survived by Aunt Lillian (Pod) Patterson and uncles George and Eric Lundquist (Kimmarie), and numerous cousins and their families.

Sue was preceded in death by her husband, Todd Johnston; brother-in-law, Joel Johnston; mother, Pat Evans; father, Arthur Lundquist; grandmother, Frieda Eklund; grandfather, Ralph Lundquist; grandparents Joseph and Lillian Evans; aunts and uncles Pete and Doris Evans; Robert and Margaret (Peggy) Dudley; cousin Larry Dudley; and loving partner of many years, Art Philbrook.

Sue will be missed by all who knew and loved her. All Sue’s family and friends are invited to her celebration of life on November 4, 2023, at 11am at Ocean View Cemetery, Eureka, CA. In lieu of flowers, donations may be made in Sue’s name to the Sequoia Humane Society. Online at sequoiahumane.org or at 6073 Loma Ave., Eureka, CA 95503.

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Gerardo (Jerry) Gomez was born in Valparaizo, Zacatecas, Mexico on February 14, 1977 and passed on October 20, 2023 at the City of Hope Medical Center in Duarte, California.

Jerry fought a courageous and valiant battle against cancer. He did not fight this disease alone — Jerry was lovingly supported by his family and friends.

Jerry is survived by his dedicated and loving brother Juan “Manny” Ramirez, sister-in-law Nancy Nunez, and nephew Adrian Ramirez.

Jerry was preceded in death by his dear mother, Roselia Rodriguez, and is now reunited with her.

Jerry worked his dream job with the Los Angeles Dodgers for 10 years as a lead security guard at the Dodger Stadium’s Left Field Pavilion.

Jerry also worked a driving detail for a private company for 10 years where he drove famous athletes and celebrities and CEO’S around the Los Angeles area.

In 2022, Jerry left his career in the Los Angeles area and moved to Fortuna to be closer to his brother, sister-in-law and beloved nephew.

Before Jerry’s illness, he served as a Community Service Officer for the Eureka Police Department. He cherished his time with the department and made many friends there.

Jerry will be sorely missed by his brother Manny who remarked, “He has been there for me when I needed him. His jokes, outgoing personality, and big smile I will forever hold in my heart. I deeply appreciated the love my brother showed to my son, Adrian.”

The family would like to thank the City of Eureka’s Police Department Command Staff, officers and employees who helped Jerry fight cancer with their support and love. Their unwavering kindness and assistance were appreciated by Jerry and his family more than they will ever know. They were his biggest fans.

Also, thank you to cousin Kimberly for taking Jerry to all his many appointments and for her devotion to him spending time to be there for her cousin during these incredibly hard times.

Jerry’s family would also like to thank the doctors and medical staff at the Saint Helena and City of Hope for their excellent care and compassion during his stay. The Saint Helena and City of Hope gave Manny the gift of extra quality time to spend with his brother before his passing.

“I will remember the special times we spent together in our younger years,” said Manny. “Jerry used to take me to paint ball shooting, golfing, hiking, sports events, and dirt bike riding. I will always treasure these memories and the time that I spent with my brother.”

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Press release from the Humboldt County Sheriff’s Office:

On 10/28/2023, at about 0652, Humboldt County Sheriff’s deputies were dispatched to the 1900 block of Golf Course Road near Arcata for the report of shots fired.

Deputies arrived on scene and learned multiple shots were fired at an occupied residence. Deputies inspected the residence and found a window shot out and several bullet holes inside the interior walls and ceiling. No one was injured from the shooting.  During the investigation, deputies were contacted by an additional reporting party who advised Jahria Zion was armed with a firearm and suffering from a possible mental health episode. Based upon information and evidence at the scene, it was determined that Jahria Zion was the person responsible for shooting at the occupied residence.  

At around 1600 hours, deputies learned Zion was in the Rio Dell area armed with a pistol. Rio Dell Police Department located Zion in the 200 block of Sequoia Avenue, and he was taken into custody without incident.

A search warrant was served on Zion’s vehicle and deputies located three loaded semi-automatic rifles with high-capacity magazines and a 12 gauge shotgun. Several additional high-capacity magazines, approximately 45 grams of suspected cocaine, and numerous prepackaged Alprazolam pills were also found in Zion’s possession.

Zion was booked for assault with a semiautomatic firearm (PC 245(B)), shooting at an inhabited dwelling (PC 246), possession of a controlled substance (H&S 11375(B)(1)), possession of a high-capacity magazine (PC 32310), altering firearm serial number (PC 23900), and illegally possessing an assault weapon (PC 30605(A)).   

This case is still under investigation.

 Anyone with information about this case or related criminal activity is encouraged to call the Humboldt County Sheriff’s Office at (707) 445-7251 or the Sheriff’s Office Crime Tip line at (707) 268-2539.

Press release from the Humboldt County Sheriff’s Office:

Under California law, certain sex offender registrants must abide by special terms between 5 p.m. and 5 a.m. on Halloween night, including:

• Stay in their own home;
• Not answer the door for anyone except Law Enforcement;
• Keep all exterior lights off;
• Cannot pass out treats;
• Cannot decorate their house for Halloween.

In coordination with State Parole and County Probation, Sheriff’s Investigators will be closely monitoring PC 290 registrants Halloween night, ensuring registrants are abiding by these terms.

Community members are also encouraged to review the Department of Justice’s Megan’s Law database for any area where you intend to take children trick-or-treating and practice the following Halloween safety tips:

For Pedestrians:

• Adults should always supervise children while trick or treating.
• If you will be walking at night, be visible. Carry a flashlight and wear light, reflective clothing so that drivers can see you.
• Make sure Halloween costumes are flame-retardant and visible with retro-reflective material.
• Walk in well-lit areas on the sidewalk, not on the street.
• Never allow children to run out into the street.
• Only cross the street at crosswalks or corners where it is safe.
• Only trick-or-treat at residences with exterior lights on or that indicate they are accepting trick-or- treaters.

For Drivers:

• Drive cautiously and slow down.
• Watch for pedestrians who may be in dark clothing or may cross roads unexpectedly.
• Carefully exit and enter driveways and alleys.
• Be extra alert for vehicles backing out of driveways or leaving parking spaces as drive-up trick or treating may be more common this year.
• Do not drink alcohol and drive. Designate a non-drinking driver if your plans for the holiday include consuming impairing substances.

The Humboldt County Sheriff’s Office is a participant in the Region II Sexual Assault Felony Enforcement (SAFE) Team, and these enforcement efforts are funded through the SAFE grant.

Press release from Humboldt Bay Fire:

At approximately 6:55 pm on Sunday October 29th Humboldt Bay Fire (HBF) was dispatched to a reported structure fire/porch on fire at a residence on the 3300 block of Williams St. in Eureka. A neighbor reported that the porch of the residence across the street from them was on fire and they did not know if anyone was home. HBF responded with three fire engines, one ladder truck, and two Chief Officers.

The first arriving engine reported a working fire with heavy fire involvement to the front porch of a single-story wood frame residence with possible fire extension into the attic. The crew established a water supply and went to work immediately suppressing the fire.

Subsequent arriving units assisted with ventilation of smoke from the structure and searching the residence for occupants. Two residents were found home at the time of the fire at the rear of the residence. Fire personnel assisted with evacuating the residents and treatment of one resident for minor smoke inhalation. The resident was turned over to City Ambulance personnel upon their arrival but did not require transport to the hospital, and were treated and released on scene.

Fire personnel contained and controlled the fire within 15 minutes of arrival, limiting fire, smoke, and water damage to the front porch, living room, and attic. Crews remained on scene for approximately two hours to ensure the fire was extinguished and to secure the residence.

The cause of the fire is under investigation but preliminary investigation indicates the cause of the fire is accidental. Initial damage estimates are approximately $20,000.HBF reminds residents to fully extinguish cigarettes before discarding. At this time of year with temperatures dropping significantly overnight and more residents using heating appliances we would like to remind everyone to ensure their appliances are clean and in god operational condition. Combustibles should be kept away from heat sources such as heater vents, fireplaces, and wood stoves.

Please contact us at 707-441-4000 for a safety inspection of your home or business.