Newsom’s rejection of Senate Bill 799 delivers a rare blow to organized labor, which has enjoyed strong support in the Democratic-controlled state Legislature.

In his veto message, Newsom said expanding benefits would make the state’s unemployment trust fund “vulnerable to insolvency.” California’s unemployment fund already is projected to be nearly $20 billion in debt by the end of the year due to money the state has borrowed from the federal government to provide the state’s benefits.

“Now is not the time to increase costs or incur this sizable debt,” Newsom stated.

California lawmakers passed SB 799 at the end of the legislative session in September after the Hollywood strikes dragged on for more than four months. With the exception of New York and New Jersey, most states don’t allow striking workers to collect unemployment.

The bill would not have taken effect until January, putting the proposed benefits out of reach for members of the Writers Guild of America, which struck a tentative deal with film studios on Sept. 24. Hollywood actors remain on strike, but the union representing them is scheduled to resume negotiations with studios on Monday.

The legislation put Newsom in a tricky spot politically because he did not want to appear to take sides in the Hollywood strikes. California Republicans opposed the bill, arguing that the legislation was fundamentally unfair to businesses since the state would in essence be taking the side of striking union members during a labor dispute. Democrats said it would merely help striking workers pay their bills during a tough time.

Labor unions, including the Writers Guild of America and SAG-AFTRA, lobbied in favor of the expanded benefits. Workers on strikes rely on side jobs and a union’s strike fund for money, but labor unions say that funding isn’t enough. California’s unemployment pay is $450 per week for a maximum of 26 weeks.

The California Chamber of Commerce and other business groups oppose the bill because they said it would lead to higher employer taxes. Businesses pay state and federal payroll taxes to fund the unemployment insurance program, but those tax dollars haven’t been sufficient to pay for the benefits. Employers also pay additional taxes annually to help repay the state’s loan from the federal government.

Lawmakers failed to pass a similar bill in 2019 to provide unemployment benefits to California workers on strike.