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High unemployment will persist in California for at least a couple more years, the state Department of Employment Development predicts, and the state's $10 billion debt to the federal government will also persist unless California employers cough up more money.

The projections are contained in a new EDD report.

California began borrowing to shore up its flat-broke Unemployment Insurance Fund (UIF) nearly four years ago. The fund pays for the initial 26 weeks of unemployment insurance benefits, plus portions of extended benefits.

The debt grew to nearly $10 billion by the end of 2011. It's expected to hit $10.2 billion by the end of this year and remain at that level through 2013 before slowly declining in 2014 as, EDD expects, unemployment drifts slowly downward.

California has just under 2 million unemployed now. The agency expects that the number will decline slowly in 2013 and 2014. It also expects new claims for unemployment insurance benefits to remain at about 2 million a year through 2014.

The federal government slightly boosted taxes on employers to offset some of the state's UIF debt, but it also started charging interest on that debt -- about $300 million a year -- in 2011. With the UIF in the red and the state budget facing deficits, Gov. Jerry Brown and the Legislature opted to borrow money for the interest payments from the Disability Insurance Fund (DIF), which is financed by payroll taxes on employees.

Brown asked the Legislature this to raise taxes on employers to repay the DIF loan, but there was no action -- nor has anyone proposed a plan to repay the larger, $10 billion UIF debt to the federal government.



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