California Can’t Afford Trump’s New Unemployment Action, Newsom Says

August 11, 2020 Updated: August 11, 2020

California doesn’t have adequate resources to give residents the state’s portion of an extra $400 a week in unemployment benefits ordered by President Donald Trump amid the COVID-19 pandemic, Gov. Gavin Newsom said on Aug. 10.

Trump released a memorandum on Aug. 8 calling for all states to continue providing enhanced unemployment financial assistance at the reduced amount, after the first federal Pandemic Emergency Unemployment Compensation (PEUC) program, which offered $600 a week, expired on July 25.

Under Trump’s new plan, enhanced unemployment benefits would cost California an extra $700 million a week, Newsom said at a press conference, adding that the state’s $70 billion reserve fund would soon dip below an acceptable level. When the fund dips below $25 billion, the state would no longer qualify for federal assistance and would be responsible for the entire $2.8 billion weekly cost, he said.

Newsom said any allotment received from the federal government as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act has already run dry.

“There is no money sitting in the piggy bank of the previous CARES Act to be reprioritized or reconstituted for this purpose,” said Newsom. It “simply does not exist.”

Trump offered up to $44 billion of the Department of Homeland Security’s Disaster Relief Fund to supplement state expenditures in the executive action. The funding would cover up to 75 percent of a state’s unemployment costs through Dec. 27. The other 25 percent is expected to come from a state’s existing emergency relief funds.

Newsom said in order for the state to provide additional financial support, the federal government would need to front those funds to California. The state can’t shoulder the financial burden without cutting important services or further negatively affecting businesses or individuals, because the state’s capacity has been diminished by the loss of tax revenues due to the COVID-19 pandemic, he added.

Newsom said Trump’s executive order is a radically different approach in response to emergencies than methods that have been applied in the past, saying, historically, the federal government fronts the money, recognizing the state’s constraints and scarcity of resources.

“Even a state as large and well-resourced and as well-managed in terms of our reserves and our capacity to borrow, we’re simply just not in that position,” said Newsom. “We have unemployment that is worse than we’ve seen since the Great Depression.”

Nearly 3 million Californians were unemployed when the original round of enhanced unemployment benefits expired on July 25, according to the U.S. Department of Labor.

“We are at peril of being in a position where we’re making false commitments and false promises to millions of Californians” if the federal government doesn’t step in, Newsom said.

Some politicians say Newsom is attempting to blame others for his mismanagement of resources.

“That press conference by Gov. Newsom was the worst display of obfuscation and accountability dodging I’ve ever seen. … California deserves better,” Assemblyman Kevin Kiley (R-Rocklin) said in a tweet.