Eyewitness News investigates a tax on employers that continues to go up. It's called the "FUTA" tax. It stands for Federal Unemployment Trust Fund.
The tax rate has increased over the last few years because the State of California took a loan from the federal government and hasn't paid it back. Employers have always paid the FUTA tax, but they got slapped with additional charges last year, and this year it went up again. They say it's frustrating, especially when the governor claims the economy is improving.
Paper Converters in Fresno has been in business for nearly three decades. It employs about 70 workers and is familiar with the FUTA tax. It helps pay for unemployment insurance for every worker. But CEO Carol Cloud says she never expected a hefty increase, on top of what she already pays.
"I thought they'd made a horrible mistake. So I called and they said, 'oh no no, this is a new deal,'" said Cloud.
Several years ago, California was one of many states across the country that borrowed money from the federal government to pay for growing unemployment costs. Now, California owes about $10 billion to the federal government. Until that debt is paid, taxes are going up for employers. Assemblyman Jim Patterson says it isn't right.
"The debt is now due and employers in the State of California are being hit with large surtaxes. And that is just another wet blanket on the state of the economy here in the State of California. This is very bad news for us," said Patterson.
After getting an unexpected $3,700 bill last year, Cloud wrote a letter to the governor asking why. This year, it's over $5,000.
"Why is it that we have to pay it, when the state borrowed it? In my opinion, the state borrowed it so the state should pay it back. It shouldn't fall on the backs of employers. They want us to hire more people, do all these things, but we keep getting more taxes," said Cloud.
Bettye Smith of Payroll People, which alerts businesses of changing tax law, says she doesn't expect the FUTA tax to go away anytime soon.
"I would suspect we're going to see it imposed again this year. I don't anticipate it being forgiven by the federal government," said Smith.
In most cases, payroll companies are telling businesses about this increased tax. But for small businesses that do their own payroll, they may not know about it, until they get hit with a penalty. The FUTA tax for 2013 is due at the end of January.
Eyewitness News asked for a response from the Governor's office, but it didn't respond by deadline.