California turns into first state to borrow federal cash to pay unemployment claims

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California has change into the primary state within the nation to borrow cash from the federal authorities to assist it pay out the hovering variety of unemployment claims tied to the coronavirus pandemic.

The nation’s most populous state borrowed $348 million after receiving approval to make use of as much as $10 billion in federal funds till the top of July, a Treasury Division spokesman advised the Wall Road Journal on Monday.

Together with California, Illinois and Connecticut have additionally been accredited to faucet into federal funds to assist with the unemployment claims — $12.6 billion and $1.1 billion, respectively – however neither state has but to borrow the cash as of the top of April.


California, whose financial system could be the world’s fifth largest if it was an impartial nation, has been exhausting hit by the coronavirus pandemic – particularly in relation to individuals’s private funds. About 3.7 million individuals have filed unemployment claims within the state since mid-March.

There’s additionally mounting strain on Gov. Gavin Newsom to loosen up the state’s stay-at-home orders and reopen components of the financial system. Protests final week occurred from Huntington Seaside to Sacramento towards Newsom’s warning to reopen, and a few counties within the state are defying the orders and permitting sure enterprise to reopen.

The strikes underscore Newsom’s problem because the state enters its seventh week beneath stay-at-home orders, with solely companies deemed important allowed to function. Gyms, bars, buying malls, restaurant eating rooms and sports activities arenas all stay shuttered.


Newsom hinted final week that change was coming quickly. He has beforehand outlined a phased method through which the financial system would progressively return to regular.

However on the identical time he warned of troubling indicators, together with an absence of testing in rural areas that may be concealing a lurking menace from the virus. He acknowledged the fitting of residents to protest, saying he welcomed numerous viewpoints, but additionally warned that crowding posed a well being menace.

Newsom additionally confirmed the apparent: With its once-roaring financial system in shackles and tens of millions jobless, the state will face a funding shortfall that may run into billions of {dollars}.

“Billions in surplus, in simply weeks, tens of billions of deficit,” he stated.

The Related Press contributed to this report.

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