On Tuesday, Rep. Vince Fong (R-CA) introduced the California Accountability and Loan Repayment Act (the CAL Repayment Act), which requires California to repay its outstanding $21 billion loan to the federal government before spending federal money on other programs.
Gavin Newsom’s state is the only state that has yet to repay its COVID-era unemployment loans (UI).
The bill would require California to prioritize repayment of its federal UI debt before spending any eligible federal funds on other programs and would require the state to direct available federal funds toward the loan within 5 business days of receipt.
Additionally, if the state diverts funds, it must repay the full misused amount to the federal government.
Newsom’s failure to repay the loans has placed the burden directly on the backs of employers in the state. The debt has led to automatic federal tax penalties on California employers via reduced FUTA tax credits, costing businesses roughly $84 per worker in 2025, with costs expected to rise.
In January, Rep. Fong shared details about the “hidden jobs tax” that Newsom pushed onto the backs of the business owners.
California employers are about to get hit with a massive tax increase — one they never voted on, one lawmakers and the governor never debated, but one Sacramento knew was coming.
At the very moment families and employers should be seeing relief from the Working Families Tax Cuts, which are in effect this year, California is moving in the opposite direction by raising taxes on employees and worsening the cost-of-living crisis already plaguing the state.
Hellbound and Down 