News release
State Sen. Suzette Martinez Valladares, R-Acton, has co-authored Senate Joint Resolution 15, urging Congress to shield California businesses from federal tax hikes triggered by Gov. Gavin Newsom’s failure to repay the state’s COVID-era unemployment insurance debt, according to a news release from the senator’s office.
“California businesses survived shutdowns, protected jobs and held their communities together — and this is how Sacramento repays them,” Valladares said in the release. “Our state leaders failed on fraud, failed on fiscal responsibility, and now they want employers to clean up the mess. Not on our watch.”
Without congressional action, California employers face a 5.2% payroll tax — nearly nine times the rate paid by businesses in debt-free states, according to the California Business Roundtable. The impact will fall hardest on small businesses, which make up 99.8% of all California businesses and support 7.6 million jobs statewide, the release said.
The debt traces back to the pandemic, when California’s Employment Development Department paid out an estimated $20 to $32 billion in fraudulent unemployment claims while employers were forced to shut their doors, the release said.
Rather than using budget surpluses to address the resulting federal debt, state leadership allowed it to grow — and now California businesses are left holding the bill, potentially for decades, the release said.
“I warned about this debt in 2022, when I served on a budget subcommittee in the Assembly,” Valladares added. “Sacramento had the surplus to fix it and chose not to. That is not a mistake — that is a failure of leadership. California businesses did not cause this crisis, and it is fundamentally wrong to make them pay for the state’s fraud failures and fiscal negligence.”
All 10 members of the California Senate Republican Caucus have united in support of SJR 15.
