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California’s unemployment debt grows as businesses ask Newsom for help (latimes.com)
9 points by IncRnd on June 19, 2021 | hide | past | favorite | 3 comments



Earlier this week:

"California's operating budget surplus, fueled by its surging economy and capital gains taxes, swelled to a record $75 billion..."

https://www.bloombergquint.com/gadfly/california-defies-doom...

This LA Times article warns that "California’s borrowing to pay unemployment benefits will balloon to $26.7 billion by the end of next year..."

$75 - $26.7 = $48.3 billion operating budget surplus


I have the same question. Why not aggressively pay of the existing debt and reduce borrowing, when the sate has enough money in general budget.

> The independent Legislative Analyst’s Office estimates that the total debt may not be paid off until 2031.

Negative consequences on the timeline are so far from the decision making point, that it will be hard to attribute one to another.


>I have the same question. Why not aggressively pay of the existing debt and reduce borrowing, when the sate has enough money in general budget.

I don’t know about this specific case but it can make sense for a state to borrow if their rate of return is greater than the interest rate on debt. With capital being so cheap right now this is likely true (unless they are pumping it into their high speed rail). Similar idea to people investing in their retirement instead of paying off their mortgage.




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