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Ready for some back of the napkin numbers?

In California, the governor pretty much has destroyed vast sectors of the economy. 2.7 million have applied for unemployment benefits over the last 5 weeks and more are expected to over the coming weeks. Currently the unemployment rate is about 18%. Last week about $2 billion was spent on unemployment benefits by the state. This is the week where the reserve fund for unemployment runs out. Normally when this happens the State borrows from the US Treasury. However, during the Great Recession California borrowed $10.2 billion, and did not repay the money. This forced the Federal government to levy a special tax on California businesses until the funds were repaid. If you were Trump, would you lend money to a proven deadbeat, who somehow has money to give to illegals?

On the revenue side, state taxes on average dropped 17% during the Great Recession. With California's heavy reliance on capital gains taxes, we can assume about the same drop in revenue even though sales taxes will be hit harder. Let's figure about a $35 billion drop in revenue. Now some of this was offset by the stimulus bill where California got $15.3 billion. California also has a rainy day fund of about $20 billion which will even this area out for the first year of the recession.

Medi Cal estimates are the hardest to figure. They were estimated to be $23.5 billion for the year, but that was with a 4% unemployment rate. There were also separate provisions for hospitals in the stimulus bill, and I'm sure a big chunk of that will go to Medi Cal. Let's just hope the Federal government covers the increase in this area through its stimulus program.

California's budget for the year is about $200 billion. With this level of unemployment, figure conservatively about $70 billion over the course of a year for unemployment benefits. This assumes benefits stop at 6 months of unemployment, the unemployment percentage doesn't go dramatically higher, and there is reasonable churn in the unemployed populous. It is very easy to furlough, fire or lay off workers. To get those jobs back takes time especially when the small businesses have been slaughtered. These funds for unemployment have to come from somewhere or the checks bounce.