Dan Walters

Dan Walters

By Dan Walters
dwalters@sacbee.com
Published: Friday, May. 24, 2013 – 12:00 am | Page 3A

When Gov. Jerry Brown talks about reducing the state’s “wall of debt,” he carefully limits it to about $30 billion in budget deficits, mostly money owed to schools and community colleges.

One of the debts he omits is the $10 billion-plus that California borrowed from the federal government to keep unemployment insurance flowing to jobless workers after the Unemployment Insurance Fund ran out of money a couple of years ago.

At one point, Brown did suggest that payroll taxes on employers be boosted to pay the principal and several hundred million dollars a year in interest on the debt, but that went nowhere. So the state has been borrowing money from the Disability Insurance Fund, collected from employees, to pay the interest.

Meanwhile, the feds want their money back, so they have been incrementally increasing employers’ payroll taxes to recapture the money. The extra payroll levies are nearly $600 million this year, are projected to grow to $2.6 billion a year by 2019 and will remain in force until the debt is repaid.

Employers, especially small employers, are beginning to grate at the new tax bills, seeing them as another impediment to adding more workers to their payrolls, especially in combination with new health costs under the Affordable Care Act.

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