Sovereign Texas
Sovereign Texas refused $550 million in freshly-printed stimulus money. Sovereign Texas now borrowing $160 million from the federal government
Texas officially became beholden to the Obama administration this week, borrowing $160 million from the federal government to keep the state’s unemployment trust fund solvent — even after refusing to take $550 million in federal stimulus funds.
Borrowing became unavoidable as the number of jobless being paid benefits in Texas jumped from 139,592 in May 2008 to 353,881 in May 2009, costing an additional $258.2 million for the month.
The stimulus money would have reduced how much Texas had to borrow and would have lowered the tax increase that state employers will face next year to raise the money needed to pay back the loans.
But the amount the state would need to borrow became controversial earlier this year after Gov. Rick Perry refused to support taking $550 million in federal stimulus money because it only could be accepted if unemployment coverage in Texas was broadened.
Perry spokeswoman Allison Castle said long-term expenses related to expanding the system to gain the stimulus money outweighed any savings.
“Stimulus funding would have merely reduced the amount the state must bond or borrow in the immediate-term, but the implications for employer tax rates and the long-term costs of the expansions mandated under the stimulus would exceed any short-term benefit, ultimately burdening Texas employers with higher taxes and limiting job creation,” she said.
Legislation to accept the stimulus money for the unemployment fund passed the Senate in the recent legislative session but died in the House.
The state is expected to borrow up to $493 million interest free from the U.S. Labor Department between now and Oct. 1 so it can continue to pay unemployment claims.
The state ultimately is expected to have to take out up to $2 billion in bonds to repay the federal loans and spread the burden of higher taxes on businesses out for four or five years.
Rep. Mark Strama, D-Austin, said the stimulus money would have eliminated the need to borrow $550 million and would have saved $100 million in interest payments on the bonds.
He said Perry should add the unemployment insurance legislation to the call of an expected special legislative session, but admitted that would require “a pretty dramatic turnaround” of the governor’s position.
Texas Workforce Commission Chairman Tom Pauken said the continuing national economic downturn has had a dramatic impact not only on employment in Texas but how long people continue to receive benefits.
People are staying unemployed longer and so, the overall pool grows, he said.
“Companies are just not hiring to a significant degree,” Pauken said.
Texas in 2003 had to issue $1.4 billion in bonds to cover a $300 million federal loan for the unemployment trust and another $1.1 billion to maintain its solvency.
Pauken said people who are due unemployment compensation will receive it from the state. He said the debate is over how to pay the claims, not whether they should be paid.
Texas officially became beholden to the Obama administration this week, borrowing $160 million from the federal government to keep the state’s unemployment trust fund solvent — even after refusing to take $550 million in federal stimulus funds.
Borrowing became unavoidable as the number of jobless being paid benefits in Texas jumped from 139,592 in May 2008 to 353,881 in May 2009, costing an additional $258.2 million for the month.
The stimulus money would have reduced how much Texas had to borrow and would have lowered the tax increase that state employers will face next year to raise the money needed to pay back the loans.
But the amount the state would need to borrow became controversial earlier this year after Gov. Rick Perry refused to support taking $550 million in federal stimulus money because it only could be accepted if unemployment coverage in Texas was broadened.
Perry spokeswoman Allison Castle said long-term expenses related to expanding the system to gain the stimulus money outweighed any savings.
“Stimulus funding would have merely reduced the amount the state must bond or borrow in the immediate-term, but the implications for employer tax rates and the long-term costs of the expansions mandated under the stimulus would exceed any short-term benefit, ultimately burdening Texas employers with higher taxes and limiting job creation,” she said.
Legislation to accept the stimulus money for the unemployment fund passed the Senate in the recent legislative session but died in the House.
The state is expected to borrow up to $493 million interest free from the U.S. Labor Department between now and Oct. 1 so it can continue to pay unemployment claims.
The state ultimately is expected to have to take out up to $2 billion in bonds to repay the federal loans and spread the burden of higher taxes on businesses out for four or five years.
Rep. Mark Strama, D-Austin, said the stimulus money would have eliminated the need to borrow $550 million and would have saved $100 million in interest payments on the bonds.
He said Perry should add the unemployment insurance legislation to the call of an expected special legislative session, but admitted that would require “a pretty dramatic turnaround” of the governor’s position.
Texas Workforce Commission Chairman Tom Pauken said the continuing national economic downturn has had a dramatic impact not only on employment in Texas but how long people continue to receive benefits.
People are staying unemployed longer and so, the overall pool grows, he said.
“Companies are just not hiring to a significant degree,” Pauken said.
Texas in 2003 had to issue $1.4 billion in bonds to cover a $300 million federal loan for the unemployment trust and another $1.1 billion to maintain its solvency.
Pauken said people who are due unemployment compensation will receive it from the state. He said the debate is over how to pay the claims, not whether they should be paid.
posted by OArnsworth at 12:07 PM
<< Home