California
Tough love plan could end California's unemployment insurance stalemate
When the Great Recession struck California 17 years ago and hundreds of thousands of workers lost their jobs, the state’s unemployment insurance system crashed.
The employer-financed program quickly exhausted its thin reserves, due to a short-sighted political decision six years earlier.
In 2001, the Unemployment Insurance Fund had a $6.5 billion positive balance. But the governor at the time, Democrat Gray Davis, owed big political debts to unions that financed his 1998 campaign. He repaid them by doubling unemployment insurance benefits, contending that the seemingly hefty reserve could cover them without raising payroll taxes on employers.
When recession struck, the insurance fund soon leaked red ink and the state borrowed about $10 billion from the federal government to maintain cash payments. When the state didn’t repay the loan, the feds raised payroll taxes for nearly a decade to retire the loan.
It should have been a lesson for political policymakers about instant gratification and financial responsibility, but it wasn’t.
Shortly after the $10 billion loan was paid off, California was hammered by the COVID-19 pandemic, and upwards of 3 million workers lost their jobs as the state ordered workplace closures.
Once again, the unemployment insurance program had virtually no reserves to cover the sharp increase in claims. Once again it borrowed from the federal government, this time for $20 billion, and once again its failure to repay forced the feds to increase payroll taxes.
In addition to a double dose of financial problems, the Employment Development Department has also experienced managerial failures.
In 2011 Elaine Howle, the state auditor, laid out the department’s shortcomings in a sharply worded report, but when the pandemic hit, they once again became evident. There were massive glitches in responding to legitimate claims for insurance benefits, while the department gave tens of billions of dollars to fraudsters.
Meanwhile employers are still repaying the last loan, and the state’s insurance fund is continuing to run deficits, unable to cover current benefits of nearly $7 billion a year.
With that history in mind, another watchdog agency, the Legislative Analyst’s Office, is urging a complete overhaul of unemployment insurance, declaring the system “is broken.”
Noting that the current state payroll tax cannot fully cover current benefits, much less build reserves, the LAO report projects a “perpetually outstanding federal loan” to keep payments flowing that must be repaid with interest.
The report proposes a four-part tough love approach to a crisis that has been building for more than two decades and cannot solve itself, to wit it advises the state to:
- Increase the taxable wage base from $7,000 per worker to $46,800, tying it to the actual benefits of up to $450 a week. It “would place California among the ten states with taxable wages bases above $40,000 and all other Western states.”
- Adopt two payroll tax rates, one to cover current benefits and another to rebuild reserves. The combined rate of 1.9% would be applied to the $46,800 wage base.
- Base employers’ tax rates on their changes in employment, thus imposing higher costs on employers that reduce their number of workers.
- Refinance the federal loan with a bond backed by payroll taxes and state loans from its internal sources to reduce overall interest costs.
There may be other alternatives, perhaps affecting benefits, but the main thing is that doing nothing will just perpetuate this crisis — even though the politics of the issue are daunting.
It’s been a political stalemate for nearly a quarter-century, pitting unions seeking to protect, or even increase, benefits against employers who don’t want to shoulder increased taxes. Successive governors and legislative leaders have shunned engagement, preferring to kick the can down the road.
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California
Letters to the Editor: The purpose of California’s journalism fund isn’t just protecting its biggest players
To the editor: The role of government is not to pick winners and losers in journalism, which is precisely why the California Civic Media Program was designed with independent safeguards from the outset (“Ensure that California’s journalism fund supports key players,” May 18). Funding decisions will ultimately be made by an independent third-party administrator, not by state officials or political appointees.
The program also followed the Legislature’s direction in the creation of a nine-member advisory committee, which has continuously emphasized expanding access to local, ethnic and community media, particularly in underserved communities and regions with limited local news coverage — goals enshrined in the program’s statute. Furthermore, it says the advisory board “may consider” awarding funds based on the number of journalists an organization employs — but in no way requires it.
The purpose of the California Civic Media Program was never simply to preserve the state’s largest publishers, although they are critical. It was to help close information gaps, strengthen newsroom sustainability and ensure more Californians have access to accurate, well-sourced local reporting that empowers participation in civic life and builds stronger communities across the state. At a time when local journalism is struggling nationwide, California is working hard to help sustain and strengthen it for future generations.
Dee Dee Myers, Sacramento
This writer is director of the Governor’s Office of Business and Economic Development.
California
Smoldering legacy: A toxic fire prompts new safety rules as California’s green-power shift speeds ahead
It’s been 16 months since a massive fire tore through one of the world’s largest lithium-ion battery storage facilities in rural Monterey County, spewing toxic gas into the air as it smoldered for several days, and, even today, cleanup is far from complete.
It will take at least several more months, and possibly another year, before the charred, waterfront power plant owned by Texas-based Vistra Corp. is cleared, Monterey County Supervisor Glenn Church said.
The process is slow because it is dangerous, with thousands of batteries yet to be removed and crews working carefully to avoid reigniting a fire. “Of course, quicker would be better, but safety has to be first,” Church said.
The blaze in Moss Landing provoked hostility toward battery projects in California, where state officials are pursuing an aggressive goal of 100% clean energy usage by 2045 to increase the grid’s capacity and combat the catastrophic effects of climate change.
A safe energy transition
Battery energy storage systems hold excess energy generated during the day — by solar panels, for instance — and release it into the power grid during times of high demand, including evening hours. California has invested heavily in battery storage, which, my colleague Hayley Smith reported, grew more than 3,000% from 500 megawatts in 2020 to more than 15,700 megawatts in 2025.
A new bipartisan bill introduced this month in the U.S. House of Representatives aims to keep this transition safe.
The Better Energy Storage and Safety Act would dedicate federal funding of $30 million annually over the next five years toward research and stress testing for the systems.
It was authored by Rep. Jimmy Panetta, a Democrat whose Central Coast district includes Moss Landing, and co-led by Rep. Pat Harrigan, a North Carolina Republican.
Despite efforts by the Trump administration to stymie green energy, Panetta said in an interview, “you have to accept the reality of renewables … That’s why we want to ensure that it’s as safe as possible.”
A fast energy transition
The Moss Landing fire has represented the proverbial elephant in the room in the midst of California’s rapid energy transition, Church said.
He has called for more local control over where battery systems are built and been a vocal advocate for more safety regulations, saying the catastrophe in Moss Landing should be learned from, not written off as “an inconvenient accident.”
With proper engineering, lithium-ion battery storage sites pose little risk of catching fire, Shirley Meng, a molecular engineering professor at the University of Chicago and internationally known battery expert, told me last fall. She said safety has improved dramatically in recent years and that the failure rate is about 1 in 10 million for all types of lithium-ion batteries.
California is now speeding review for large-scale renewable energy projects through a new fast-track permitting program that does not require sign-off from county and municipal governments — a fast-track process that Church has criticized.
Last fall, Gov. Gavin Newsom signed a new state law — prompted by the Moss Landing accident— that requires battery storage safety standards and requires developers to coordinate closely with local fire departments.
Stacey Shepard, a spokesperson for the California Energy Commission, said in an email that “today’s battery systems are governed by rigorous safety standards,” use improved technology and “are placed in outdoor containers rather than inside buildings,” unlike in Moss Landing site.
The cause of the Moss Landing fire is still under investigation
Firefighters let it burn for days, citing the dangers of dousing lithium-ion battery fires with water, which can cause dangerous chemical reactions.
The blaze ignited inside a former turbine building that contained a 300-megawatt system made up of about 4,500 cabinets, each containing 22 individual battery modules, according to Vistra Corp.
Of the 99,000 individual LG battery modules in the building, about 54,450 burned, according to Vistra. Justin Daily, a spokesman for the company, said in an email that as of May 8, more than 31,000 battery modules had been removed, de-energized and shipped to recycling facilities.
“We are now working to enable safe access to batteries in the damaged portion of the building,” he said.
Today’s top stories
A bird flies by a plume of smoke from the Sandy fire off Redwood Grove Court in Simi Valley.
(Kayla Bartkowski / Los Angeles Times)
Multiple wildfires trigger unhealthful air quality alert in SoCal
Apartment scouts are on the rise in Los Angeles
- They aren’t real estate agents or brokers. Rather, they are savvy entrepreneurs who tour apartments, share listings online and, in some cases, work one-on-one with clients to find a place that fits their specific aesthetic and budget.
- The demand for apartment scouts highlights the pressures of L.A.’s competitive rental market, where vacancies are scarce and rental rates are among the highest in the country.
What else is going on
Commentary and opinions
This morning’s must-read
Another must-read
For your downtime
On May 22, Disneyland’s Millennium Falcon: Smugglers Run will include a new mission as well as new destinations such as the gas-like locale of Bespin, seen here in concept art provided by Disney. The tweaks are tied to the film “The Mandalorian and Grogu.”
(Disney Parks)
Going out
Staying in
Question of the day: Sticker shock: Send us examples of California houses with sticker prices that truly shocked you.
Is it worse than this burnt-out three-bedroom in Torrance that sold for over $1 million?
Email us at essentialcalifornia@latimes.com, and your response might appear in the newsletter this week.
And finally … the photo of the day
A firefighter pauses while clearing brush in the Sandy fire in Simi Valley.
(Kayla Bartkowski / Los Angeles Times)
Today’s photo is from Times photographer Kayla Bartkowski on a hill in Simi Valley near the Sandy fire, one of multiple blazes consuming more than 20,000 acres.
Have a great day, from the Essential California team
Hailey Branson-Potts, staff reporter
Hugo Martín, assistant editor, Fast Break desk
Kevinisha Walker, multiplatform editor
Andrew J. Campa, weekend writer
Karim Doumar, head of newsletters
How can we make this newsletter more useful? Send comments to essentialcalifornia@latimes.com.
California
They used to battle in CA elections. Now, they back the same candidate
Which of these is least likely?
Kendrick Lamar and Drake squashing their feud?
Giants fans and Dodgers fans sharing high-fives?
Or California charter schools endorsing the same candidate for superintendent as the state’s largest teachers’ union?
If you remember the 2018 election, you’d probably vote for the pigs-flying scenario of the California Charter Schools Association and the California Teachers Association being on the same page in an election year. Back then, advocates for both sides shelled out tens of millions of dollars in the contest between union-supported Tony Thurmond and charter school-backed Marshall Tuck. Thurmond came out ahead.
But this year, both associations are rallying behind candidate Richard Barrera: Four months after the teachers’ union announced its endorsement of the president of the San Diego Unified school board, the charter schools association this week said it’s backing Barrera too — a move Barrera told me “came as a bit of a surprise.”
He pointed to two attributes of San Diego schools that might explain how the usually competing groups came to support his candidacy. First, unlike in other regions, the politics surrounding San Diego school board races or other education issues did not typically pit “charters versus union.” In fact, the percentage of students attending charters grew while he was on the board.
And second, the school board included charters when it distributed money to improve school facilities. That experience working on local facilities bonds established “a unique relationship between the charter and public schools that CCSA has told me that doesn’t exist in most places,” Barrera said.
In a statement, Gregory McGinity, the executive director of the charter association’s lobbying arm, said Barrera, “has shown that supporting educators and supporting high-quality charter public schools are not mutually exclusive.”
But don’t expect both groups’ backing of Barrera to mean they will agree with each other in the future. CTA President David Goldberg told me that while the union didn’t endorse Barrera to build a coalition with charters, he didn’t find the charter association’s support of Barrera “shocking” either.
- Goldberg: “Sometimes even people who don’t see things the same way … we still want someone who is very capable running this department. That benefits all students.”
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