DATE: Monday, April 21, 2008
CONTACT: Aaron McLear/ Lisa Page, 916-445-4571
Governor Arnold Schwarzenegger sent a letter to key Congressional leaders urging them to enact a federally-funded emergency extension of unemployment insurance benefits for people who have lost their jobs in the economic downturn. The Governor also requested additional funding for administration of the unemployment insurance program to address several years of significant federal funding cuts.
The Governor has taken a number of actions to stimulate various jobs sectors, provide extra assistance to unemployed individuals and protect California's economy this year, including:
Construction:
Housing/Mortgages:
Ports/Transit:
Veterans:
Overall:
Text of the letter to Congressional leaders follows:
April 21, 2008
The Honorable Harry Reid
Majority Leader
United States Senate
Washington, DC 20510
The Honorable Nancy Pelosi
Speaker of the House
U. S. House of Representatives
Washington, DC 20515
The Honorable Mitch McConnell
Minority Leader
United States Senate
Washington, DC 20510
The Honorable John A. Boehner
Minority Leader
U. S. House of Representatives
Washington, DC 20515
Dear Senator Reid, Senator McConnell, Madam Speaker, and Mr. Boehner,
I am asking for your leadership in enacting an emergency extension of unemployment insurance (UI) benefits for people who have lost their jobs in the economic downturn, as well as in securing additional funding for the administration of the UI program.
California has been hit especially hard by the national housing slump and subprime crisis. In the past year alone, we have lost 131,000 jobs in the construction and financial services sectors. California's unemployment rate now stands at 6.2 percent, and it is clear that states cannot fully address the consequences of the national housing downturn on their own. It is critical that Congress enact an extension of unemployment benefits as soon as possible to mitigate the impact of the downturn and fully fund administrative expenses.
For the 12-month period ending March 2008, more than 444,000 unemployed workers had exhausted their regular UI benefits in California. Our state's benefits exhaustion rate is 45 percent, compared to the national rate of 35 percent. Nationwide, the percentage of UI beneficiaries exhausting their benefits is already higher than at the beginning of the 2001 and 1990-91 recessions.
There is widespread agreement among economists that extending UI benefits is one of the most effective ways to stimulate a distressed economy. The money will go into the hands of unemployed workers, who will spend it immediately to meet pressing needs. If legislation extending UI benefits by 13 weeks were enacted today, those payments would infuse approximately $1.7 billion into California's economy.
While unemployment claims have soared, funding for administration of the UI program is at historic lows and no longer adequately supports the cost of program operations, including collecting taxes, paying benefits and adjudicating claims. Workers, employers and states bear the burden of this federal funding shortfall through reduced access to services, higher taxes and delays in processing claims.
Federal funding for unemployment insurance administration has not been adjusted for inflation since 1995. For the last three years alone, the federal funding shortfall to states is approaching $1 billion. For fiscal year 2008, the national UI administrative funding appropriation has been reduced by an estimated $110 million. Roughly $30 million would have come to serve unemployed workers in California.
I am committed to working with Congress to ensure that unemployed workers receive assistance in a timely manner and for a sufficient period as reflected by the national and local employment picture. Thank you in advance for your leadership, and please let us know how we can be of assistance.
Sincerely,
Arnold Schwarzenegger
cc: The Honorable Robert C. Byrd
The Honorable Thad Cochran
The Honorable David R. Obey
The Honorable Jerry Lewis
Members of the California Congressional Delegation
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