GOP goes after blue state for billions in COVID-era unemployment debt dumped on businesses

New legislation is targeting California and the $21 billion it owes to the federal government, requiring the state to repay what it owes and not dump the responsibility on business owners.

“California’s $18+ billion unemployment insurance debt is a direct result of Sacramento’s fraud, mismanagement, and failure to prioritize taxpayers and job creators,” Rep. Vince Fong, R-Calif., wrote in a social media post.

“Instead of paying down the debt when the state had a massive surplus, Gavin Newsom shifted the burden onto employers through automatic payroll tax hikes,” added the GOP lawmaker who will introduce legislation that will limit the state’s spending of federal money on programs until the outstanding debt is paid.

California’s $18+ billion unemployment insurance debt is a direct result of Sacramento’s fraud, mismanagement, and failure to prioritize taxpayers and job creators.

Instead of paying down the debt when the state had a massive surplus, Gavin Newsom shifted the burden onto…

— Vince Fong (@vfong) May 19, 2026

“My legislation restores accountability and protects small businesses and workers from footing the bill for Sacramento’s failures,” Fong wrote.

“Under Fong’s bill, California would have to direct eligible federal funds toward repayment within five business days of the money becoming available. If it violates that provision, the state would have to pay the full amount of misused funds to the federal government,” Fox News reported, noting that the Golden State is the only one that has failed to repay federal COVID-19 funds.

“Since the state did not pay back the debt within two years, federal law requires the state’s employers to step in and pay up,” KCRA reported on the crisis back in December. “Each employer this upcoming year, regardless of the number of employees they have and whether they are part or full-time, will pay an extra $42 dollars per employee on their payroll taxes because of the debt. In 2027, the number increases to $63 and increases by another $21 per employee every year until the debt is paid.”

But rather than pay back the loans and take the burden off taxpayers, California Gov. Gavin Newsom and Democrats have continued pouring funding into their agenda items, such as taxpayer-funded healthcare for illegal immigrants.

“Fraud and mismanagement aren’t isolated incidents in Gavin Newsom’s California — they’ve become systemic failures with real consequences,” Fong, a former state legislator, said in a statement. “Rather than using the state’s past $98 billion budget surplus to pay down that debt, Sacramento shifted the burden onto employers through automatic payroll tax hikes. Enough is enough.”

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