California Gov. Gavin Newsom vetoed a bill that would have provided striking workers with unemployment salaries while demonstrating.

The Democrat defended his decision by saying the state has a high Unemployment Insurance (UI) debt. He also noted that the region is not collecting enough money in taxes to fund support for the bill's financial requirements, making it "vulnerable to insolvency."

Unemployment Benefits to Striking Workers

The potential fund is supported through a tax that businesses must pay on each work, but the tax applies to the first $7,000 of workers' salaries. This is the lowest amount that is allowed under federal law. This financial structure has been in place and has remained unchanged since 1984.

In his decision, Newsom said that any expansion for UI benefits could increase the state's outstanding federal UI debt, projected to be nearly $20 billion by the end of the year. He said the proposal could also jeopardize California's Benefit Cost Ratio add-on waiver application, which would significantly increase taxes on employers, as per The Hill.

The governor also said that the state is responsible for the interest payments on the federal UI loan and, to date, has already paid $362.7 million in interest, and another $302 million is due to be paid this month. Newsom warned that now is not the time to increase costs or incur a sizable debt.

The Democratic lawmaker's veto of the bill came amid major strikes in the state and as Hollywood writers ended their strike on Sept. 26. Despite the latter, there are still ongoing strikes by Hollywood actors and Southern California hotel workers.

The new bill represented an effort by Democratic state lawmakers to show their support for striking workers. In a statement, the bill's author, Democratic State Sen. Anthony Portantino, said that only two of the 56 strikes in the state over the past decade have lasted more than two weeks.

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Gavin Newsom's Veto

The Democratic-majority legislature passed it in September amid several high-profile strikes in the region. The proposal would have made workers on strike for at least two weeks eligible for unemployment checks. According to Reuters, most states in the country, excluding New York and New Jersey, do not provide unemployment benefits to striking workers.

The situation comes as labor unions hold more influence in California than most other states. An electorate is dominated by Democrats and a large roster of liberal officeholders who rely on union support. However, the state has a high cost of living, which makes it an expensive place to go on strike without income.

Employers can often wait out a labor action, knowing that the lost income will force unionized workers back to the bargaining table. This was evidenced in how Hollywood writers raised the issue during their demonstrations before a tentative contract agreement was announced on Sept. 24, according to the New York Times.

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