Vince Fong

GOP Rep. Vince Fong will introduce a bill on Tuesday targeting his home state of California for billions in COVID-era unemployment insurance debt owed to the federal government.

Fong's legislation would require California to repay its $21 billion loan to the federal government before spending federal funds on other programs, Fox News reported. California would have to direct eligible federal funds toward repayment of the loan within five business days of receiving the money. If the state fails to do so, then it would have to pay the full amount of the loan to the federal government.

California is the only state yet to repay its loans for a federal COVID-19-era program that helped states finance an increase in unemployment benefits claims. The state's federal unemployment debt continues to rise and is projected to reach $23 billion by the end of 2026, according to CalMatters.

"Fraud and mismanagement aren’t isolated incidents in Gavin Newsom’s California — they’ve become systemic failures with real consequences," Fong 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."

"My legislation restores accountability, protects our local small businesses and farmers, and prevents California job creators from being punished for Sacramento’s negligence," he added.

Fong has criticized Democratic California Gov. Gavin Newsom for failing to prioritize repaying the debt despite a nearly $100 billion budget surplus in 2022. California Democrats, instead, continued funding infrastructure projects, homelessness initiatives, and subsidized health insurance for illegal immigrants.

The state has since enacted a budget scaling back taxpayer-funded healthcare for illegal immigrants.

Fong has argued that the state's failure to pay off the debt has negatively impacted the state’s employers, who have been forced to help repay the loans through automatic tax hikes. This year, businesses were forced to pay an extra $42 per employee on their federal payroll taxes to help with the unpaid debt, KCRA reported.

In February, then-Labor Secretary Lori Chavez-DeRemer announced a "strike team" that was to investigate fraud and abuse in California’s unemployment insurance program.

The Department of Labor referenced the California State Auditor's reports that found the state's unemployment insurance program was high risk, partly because of "inadequate fraud prevention and claimant service," and warned that the system’s fraud prevention efforts were "marked by significant missteps" that may have led to billions of dollars in fraudulent payments.