California?s fund for paying unemployment benefits, which paid out $567.4 million in July, is expected to hit the red as soon as March, with unemployment in the state at its highest level in 12 years, and still rising. The state, with its focus on a two-month-late budget, may have to resort to federal loans or state money to pay for unemployment benefits. The fund also ran into trouble several years ago, but the state managed to avert crisis. Many are not so hopeful this time, and agree that a long-term solution to the decades-old policy must be found, which hails the beginning of a potentially huge political battle. With the economy in poor shape already, labor advocates are worried, and pushing a tax increase.
See "Deficit looms for California?s unemployment benefit fund", Marc Lifsher, Los Angeles Times, August 31, 2008