California Governor Gavin Newsom on Saturday vetoed legislation that would have granted striking workers unemployment benefits, a strong measure

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backed by Hollywood unions and other influential labor organizations in California.

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

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

“Now is not the time to increase costs or take on this significant debt,” Newsom said.

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

The bill would not have gone into effect until January, putting the proposed benefits beyond the reach of members of the Writers Guild of America, which reached a tentative agreement with movie studios on September 24. Hollywood actors continue to strike, but the union representing them will resume negotiations with the studios on Monday.

The legislation put Newsom in a difficult position politically because he did not want to appear as if he was taking sides in the Hollywood strikes. California Republicans opposed the bill, arguing that the

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Legislation was fundamentally unfair to companies because the state would essentially be siding with striking union members during a labor dispute. Democrats said it would only help striking workers pay their bills during a difficult time.

Unions, including the Writers Guild of America and SAG-AFTRA, lobbied for the expanded benefits. Workers on strike rely on part-time jobs and a union strike fund for money, but unions say funding is not enough. California unemployment benefits are $450 per week for up to 26 weeks.

The California Chamber of Commerce and other business groups opposed the bill, saying it would lead to higher employer taxes. Businesses pay state and federal payroll taxes to fund the unemployment insurance program, but those tax dollars have not been enough to pay for the benefits. Employers also pay additional taxes annually to repay the federal government loan.

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