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Schwarzenegger agrees to federal conditions to bolster unemployment fund

The governor supports changes in California law that would bring the state $844 million for expanded benefits.

February 25, 2009|Marc Lifsher

SACRAMENTO — Gov. Arnold Schwarzenegger is prepared to back legislation that would give California $844 million in federal stimulus funds to fix the state's bankrupt system for paying unemployment benefits.

The disclosure by a spokeswoman for the governor was the first indication that the Schwarzenegger administration would comply with federal requirements that make it easier for low-wage workers to be eligible for unemployment benefits.

"Given the current economic climate and unemployment insurance insolvency, the governor supports attaining the infusion of $844 million in federal funding for the state's unemployment insurance fund as we believe this will not require a permanent expansion in eligibility," spokeswoman Camille Anderson said.

The statement surprised advocates for the working poor, who had expected a hard fight to overcome opposition from influential business organizations. Employers fear that expanded benefits could lead to higher taxes on them.

The worker advocates had been pressing the administration to commit to changes in California law needed to bring the state a big share of the $7 billion that Congress and President Obama pledged to help the state provide benefits for its more than 800,000 jobless. Such benefits range from $40 to $450 a week but are slated to jump by $25 a week under Obama's plan.

The governor's backing also was news to the California Chamber of Commerce, a strong Schwarzenegger ally. The chamber had lobbied Schwarzenegger to reject the offer.

Schwarzenegger's commitment to getting the extra funds solidified his break with some fellow Republican governors, who said they would reject the largess because it had "too many strings attached."

To qualify for the money, states must enact laws that would make it easier for workers who had lost lower-wage jobs to qualify for unemployment benefits. The change would also require states to consider a laid-off worker's most recent earnings in calculating eligibility.

An unemployment insurance bill by Assemblyman Joe Coto (D-San Jose) has been introduced in the Legislature this year. But the governor has not analyzed it or committed himself to signing that particular measure, spokeswoman Anderson said.

The California Chamber of Commerce, for now, opposes the Coto bill, saying it hasn't seen any analysis that shows that the broader eligibility for benefits would be good for the state's economy.

Labor unions and advocates for the working poor, who have been pushing Congress for more than a year to make unemployment benefits available to more people, welcomed the governor's support for Obama's proposal, known as the Unemployment Insurance Modernization bill.

"The governor recognizes and understands the plight of millions of laid-off workers in California," said Angie Wei, a lobbyist in Sacramento for the California Labor Federation. "We need to put as many resources as we can [to work] to stabilize and modernize our unemployment system. Becoming eligible for the funds is good for California and good for workers."

She stressed that the added funds were needed at a time when unemployment in the state was at a 15-year high -- 9.3% in December. Worse, California's unemployment insurance fund ran out of money in January and is now relying on a $186-million loan from the U.S. Department of Labor.

In Sunday television interviews, GOP Govs. Bobby Jindal of Louisiana, Haley Barbour of Mississippi, Sonny Perdue of Georgia and Mark Sanford of South Carolina said they would reject the hundreds of millions of dollars' worth of unemployment insurance assistance.

But Schwarzenegger told ABC's George Stephanopoulos that he had no qualms about taking the stimulus money.

"Gov. Sanford says that he does not want to take the money . . . and I want to say to him: I'll take it," the governor said.

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marc.lifsher@latimes.com

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