California became the first state in the nation to borrow a loan from the federal government to pay soaring unemployment claims.
Democratic Gov. Gavin Newsom borrowed $348 million from the federal government on Monday, and has approval to borrow up to $10 billion to pay out unemployment claims through July, a Treasury Department spokesperson told the Wall Street Journal.
Loans to replenish unemployment insurance funds were also approved for Illinois and Connecticut, with Illinois approved for $12.6 billion and Connecticut for $1.1 billion. California, however, is the only state to have used the program thus far.
California’s unemployment trust fund has been depleted quickly amid the COVID-19 crisis. The fund stood at $3.1 billion at the end of February but fell to $1.9 billion in mid-April. The program allows money borrowed by states to pay regular unemployment benefits. An additional $600 per week in additional unemployment benefits provided by the CARES Act for workers is funded separately.
On Monday, Newsom said the Golden State would begin loosening its stay-at-home order, and retail stores could begin reopening as soon as Friday for pick-up services.
More than 4 million Californians have filed for unemployment insurance benefits since March 15.
