GOP bill targets blue state for billions in COVID-era unemployment debt dumped on businesses

FIRST ON FOX: A House Republican is moving to rein in California's ballooning unemployment insurance debt, arguing employers are being stuck with the bill as the state fails to repay what it owes. 

Under Fong's bill, California would have to direct eligible federal funds toward repayment within five business days of the money becoming available. If it violates that provision, the state would have to pay the full amount of misused funds to the federal government.

Newsom has since signed a budget scaling back taxpayer-funded healthcare for illegal immigrants amid the state's growing fiscal challenges.

Fong, a former state legislator, tied the massive unemployment debt to broader concerns about the Golden State's budgeting decisions.

"Fraud and mismanagement aren't isolated incidents in Gavin Newsom's California - they've become systemic failures with real consequences," Fong said in a statement. "Rather than using the state's past $98 billion budget surplus to pay down that debt, Sacramento shifted the burden onto employers through automatic payroll tax hikes. Enough is enough."

"My legislation restores accountability, protects our local small businesses and farmers, and prevents California job creators from being punished for Sacramento's negligence," he added.

Fong's bill comes as California's unemployment benefits system faces federal scrutiny over allegedly weak fraud safeguards. 

"The simple reason is because the state of California has not taken fraud very seriously," Vice President JD Vance said in a White House news conference.

A spokesperson for Newsom did not immediately respond to a request for comment.