California Gov. Gavin Newsom (D) vetoed a bill on Saturday that would have allowed striking workers to receive unemployment benefits, saying that the fund would become “vulnerable to insolvency.”
After vetoing the bill, Newsom shared his reasoning in a letter with the California State Senate, saying that the state’s Unemployment Insurance debt was already too high and that the state would not be collecting enough in taxes to support the fund if the measure were to be signed into law.
The UI fund is supported by a tax that businesses pay, but the tax is only applied to the first $7,000 of workers’ wages, which is the lowest amount allowed under federal law.
The financial structure has also remained unchanged since 1984, according to a report from The Associated Press.
“Any expansion of eligibility for UI benefits could increase California’s outstanding federal UI debt projected to be nearly $20 billion by the end of the year and could jeopardize California’s Benefit Cost Ratio add-on waiver application, significantly increasing taxes on employers,” Newsom wrote, The Hill reported.
Newsom went on to say that the state is responsible for interest payments on its federal UI loan, saying that to date, it’s “paid $362.7 million in interest with another $302 million due this month.”
“Now is not the time to increase costs or incur this sizable debt,” Newsom wrote.
The veto to the bill comes as the actors union SAG-AFTRA remains on strike in Hollywood, despite major film studios reaching an agreement with the Writer’s Guild of America.
In Southern California, hotel workers are also still on strike as they seek a better contract.
The bill was passed by Democratic lawmakers in the state who were trying to show support for striking workers.
Lorena Gonzalez Fletcher, the executive secretary-treasurer of the California Labor Federation, spoke with the AP about Newsom’s decision, saying it was a win for executives and corporations.
“This veto tips the scales further in favor of corporations and CEOs and punishes workers who exercise their fundamental right to strike,” Fletcher said. “At a time when public support of unions and strikes are at an all-time high, this veto is out-of-step with American values.”
Still, Newsom maintained in his letter that he supports workers seeking better wages and working conditions.
“I have deep appreciation and respect for workers who fight for their rights and come together in collective action. I look forward to building on the progress we have made over the past five years to improve conditions for all workers in California,” Newsom wrote.