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Texas unemployment fund may borrow $2 billion
KERA Public Broadcasting of Dallas-Fort Worth broke the story last week after an interview with Texas Workforce Commission Chairman Tom Pauken. The state has already borrowed $643 million to get the fund through to September. Pauken says a bond in the range of one and a half to two billion is possible.
"That could well be the case in terms of a bond over a seven- to ten-year period," Pauken says.
Governor Rick Perry, who appointed Pauken, disputes that figure. Last week he characterized the two-billion estimate as "premature." However, one aspect of the situation is beyond dispute. Unemployment insurance taxes for Texas businesses will be going up, according to Pauken.
"Oh, they are going to have to pay more next year," he says. "They have had lower rates in recent years because the economy has been so good in Texas, but it is going to go higher next year."
This past spring, the federal government offered Texas a little over half a billion dollars specifically for the unemployment insurance fund. The money was part of the American Recovery and Reinvestment Act. Perry and his allies in the legislature turned down the half-billion because of the strings attached. The funds were contingent upon a number of provisions, most notably, expanding unemployment insurance eligibility to include part-time workers.
"Washington DC was forcing states to change their program to access the money and we said, 'No'," Perry said. "We looked at it long term and it cost us $75 million a year in the out years every year."
Governor Perry stands by his decision. The federal conditions would have irreversibly changed the Texas unemployment benefits system, according to Perry's spokesperson, Katherine Cesinger.
"That would have imposed a federal mandate that would have permanently expanded our unemployment insurance program and burdened Texas job creators," she says.
Would the expanded benefits have been, in fact, permanent? Anne Hatchitt, Communications Director at the Texas Workforce Commission, says that the US Department of Labor has indicated that some states who adopted the federal conditions would be able to drop them in the coming years.
"It is looking as though the Department of Labor is going to essentially look the other way if they do enact the laws now and then rescind the laws later," says Hatchitt. "We have seen a letter to the State of Louisiana that says that."
Meanwhile, another angle on the story is the matter of interest on the federal loans. Hatchitt says that the state is not presently obligated to pay interest.
"It's entirely interest-free," says Hatchitt. "And typically, it's a nine-month period that the federal government provides those loans, but because of the Recovery Act, we're allowed an 18-month period. So we can go through December 2010 with interest-free loans."
But what if by December 2010, Texas hasn't raised taxes enough to pay back the federal government? That's when interest would enter the picture- perhaps in the form of the bonds mentioned by Pauken. State Representative Jim Dunnam chairs a stimulus funding committee in the legislature. He seems to regard the matter of interest as inevitable.
"He's borrowing the money that the feds would give us for free," Dunnam says. "The amount of interest we're going to pay would is far beyond the cost of any changes necessary to receive the $555 million."
While there's no shortage of opinion, no one knows exactly how this fiscal crisis will play out. One matter does appear certain though- Texas unemployment insurance taxes will be going up. © Copyright 2012, hppr
(2009-08-06)
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AMARILLO, TX
(hppr) -
The State of Texas unemployment insurance fund ran out of money last month. The state is borrowing from the federal government so that payments can continue on time. The amount of the deficit is huge, even by governmental standards. The Texas unemployment insurance fund needs as much as $2 billion.
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KERA Public Broadcasting of Dallas-Fort Worth broke the story last week after an interview with Texas Workforce Commission Chairman Tom Pauken. The state has already borrowed $643 million to get the fund through to September. Pauken says a bond in the range of one and a half to two billion is possible.
"That could well be the case in terms of a bond over a seven- to ten-year period," Pauken says.
Governor Rick Perry, who appointed Pauken, disputes that figure. Last week he characterized the two-billion estimate as "premature." However, one aspect of the situation is beyond dispute. Unemployment insurance taxes for Texas businesses will be going up, according to Pauken.
"Oh, they are going to have to pay more next year," he says. "They have had lower rates in recent years because the economy has been so good in Texas, but it is going to go higher next year."
This past spring, the federal government offered Texas a little over half a billion dollars specifically for the unemployment insurance fund. The money was part of the American Recovery and Reinvestment Act. Perry and his allies in the legislature turned down the half-billion because of the strings attached. The funds were contingent upon a number of provisions, most notably, expanding unemployment insurance eligibility to include part-time workers.
"Washington DC was forcing states to change their program to access the money and we said, 'No'," Perry said. "We looked at it long term and it cost us $75 million a year in the out years every year."
Governor Perry stands by his decision. The federal conditions would have irreversibly changed the Texas unemployment benefits system, according to Perry's spokesperson, Katherine Cesinger.
"That would have imposed a federal mandate that would have permanently expanded our unemployment insurance program and burdened Texas job creators," she says.
Would the expanded benefits have been, in fact, permanent? Anne Hatchitt, Communications Director at the Texas Workforce Commission, says that the US Department of Labor has indicated that some states who adopted the federal conditions would be able to drop them in the coming years.
"It is looking as though the Department of Labor is going to essentially look the other way if they do enact the laws now and then rescind the laws later," says Hatchitt. "We have seen a letter to the State of Louisiana that says that."
Meanwhile, another angle on the story is the matter of interest on the federal loans. Hatchitt says that the state is not presently obligated to pay interest.
"It's entirely interest-free," says Hatchitt. "And typically, it's a nine-month period that the federal government provides those loans, but because of the Recovery Act, we're allowed an 18-month period. So we can go through December 2010 with interest-free loans."
But what if by December 2010, Texas hasn't raised taxes enough to pay back the federal government? That's when interest would enter the picture- perhaps in the form of the bonds mentioned by Pauken. State Representative Jim Dunnam chairs a stimulus funding committee in the legislature. He seems to regard the matter of interest as inevitable.
"He's borrowing the money that the feds would give us for free," Dunnam says. "The amount of interest we're going to pay would is far beyond the cost of any changes necessary to receive the $555 million."
While there's no shortage of opinion, no one knows exactly how this fiscal crisis will play out. One matter does appear certain though- Texas unemployment insurance taxes will be going up. © Copyright 2012, hppr
