The Burden on Burbank: California’s Fiscal Mismanagement Hits Home

In a glaring display of fiscal irresponsibility, California’s government has severely mishandled its financial duties, placing an undue burden on Burbank’s employers. Rooted in Sections 3302(c)(2)(A) and 3302(d)(3) of the Federal Unemployment Tax Act (FUTA), the state faces penalties for not repaying federal loans meant for unemployment benefits.

Highlighting this issue, California—alongside Connecticut, Illinois, and New York—failed to repay its federal unemployment insurance loans by the crucial November 10, 2022 deadline. In stark contrast, states like Colorado, Massachusetts, Minnesota, New Jersey, and Pennsylvania showcased fiscal responsibility by repaying their loans, thereby protecting their businesses from extra tax burdens.

For Burbank employers, this translates into a 0.3% FUTA credit reduction in 2022. In an already tough economic climate, this additional tax is not just a number—it’s a significant strain on businesses struggling to survive and grow. While the percentage may seem low, it translates into millions of dollars of financial impact for all California employers and will result in increased expenses at grocery stores, higher gas prices, and escalating cost of living. Employers pass the costs along in the form of delayed raises and higher prices.

While the U.S. Virgin Islands faced a hefty 3.6% FUTA credit reduction, they at least made efforts to lessen the impact by seeking a waiver under Section 3302(c)(2)(C) of FUTA. California, however, displayed no such initiative.

This lack of action is symptomatic of California’s broader issue of mismanagement and unaccountability. It’s more than failing to repay loans; it’s about a government’s duty to foster a business-friendly environment. California’s failure in this regard directly affects employers and their employees.

But California’s elected officials and bureaucrats always seem to have billions to spend on their pet projects and endless welfare programs.

California faces a $68 billion deficit that is the direct result of scaring off businesses and wealthy taxpayers. Nonsensical “pay your fair share” rhetoric sent the likes of Elon Musk and thousands more important California taxpayers heading out of state.

As Burbank’s business community, we must demand greater fiscal responsibility and transparency from our state leaders. It’s time to hold them accountable for their actions—or lack thereof—and ensure such fiscal failures aren’t repeated. Our businesses, our workers, and our economic well-being hinge on this.

We need to initiate a dialogue on advocating for better fiscal policies in California. Your insights and experiences are crucial in guiding us towards a more financially stable and prosperous state.

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