Fiscal Fallout: CA Could Face 3.7% Payroll Tax Hike Due to New Audit Findings

By Kenneth Schrupp

The Center Square

California is scrambling to avoid an automatic 3.7% payroll tax increase to cover its projected $23.2 billion debt to the federal government for COVID-era unemployment benefits payouts, according to information uncovered through a public records request by The Center Square.

With the California State Auditor reporting the state “materially misstated” the finances of its unemployment benefits fund, experts warn these detrimental findings — along with the fund’s growing and sustained deficits — could cause the state’s tax waiver application to fail. The increased payroll tax would stabilize the fund at the expense of workers, businesses, and consumers across the state.

“We saw in the State Auditor’s report — they have called them out for serious misma