The first big financial cliff for Californians receiving (or still waiting to receive) unemployment benefits is July 31, the end of the last week for the federal $600-per-week supplement — for now. A battle is underway on Capitol Hill over extending the emergency funds, with Republicans favoring a lower $200-a-week payment to encourage Americans to go back to work faster. If the funds do expire, state lawmakers have proposed “borrowing” from the feds through a loophole to keep paying the extra $600 per week with California unemployment benefits.
Whether additional safety net funds will be made available is a big question for working class residents, in particular renters staring down the end of short-term eviction protections. Working parents weighing whether to quit their jobs or reduce hours to supervise children starting school remotely are another large segment of the workforce at risk of falling through holes in the pandemic safety net.
How much the state will ultimately pay out in unemployment benefits — and who will be on the hook in the future to settle the tab — is a massive question for California’s financial future. Already, unemployment spending during the pandemic has eclipsed the state’s total annual budgets for higher education, transportation and prisons combined, and it far exceeds yearly spending on things like affordable housing. Expect a contentious battle in the coming months about raising more state revenue, either through more borrowing or new taxes.