January 22, 2009
When you look up "short-sighted" in the dictionary, this will be cited as an example

That's our Governor, for whom the expression "penny-wise and pound-foolish" is a way of life.

Nearly a year ago, Gov. Rick Perry trumpeted $90 million in savings to businesses by temporarily suspending some of the burden of paying unemployment insurance taxes -- money meant to replenish the unemployment compensation trust fund.

The suspended tax was reinstated this month, but officials said it won't be enough to bridge the gap between the $414 million the state expects to be in the fund Oct. 1 and the $861 million it's supposed to have.

By law, the fund must keep an amount equal to 1 percent of all taxable wages in Texas.

Now the Texas Workforce Commission must decide whether to raise the tax, issue bonds to meet the shortfall or see if the state could use an interest-free federal loan, said commission Chairman Tom Pauken, a Perry appointee who took office after the tax was suspended by the commission last year.

Pauken said jobless claims will be paid, and that last year's suspension of the tax didn't cause the problem.

"We will have the money to pay for the claims," Pauken said Wednesday. "Here would be my concern: You don't want to raise taxes substantially on employers at a time when it's really tough to keep the doors open and keep people employed.

"So we want to try to -- if taxes have to go up -- make it as modest as possible to fund the system and look at other alternatives first," he said.


The replenishment tax is just one part of the unemployment insurance tax. Last March, Perry directed the state to "bring that (replenishment) tax to a screeching halt for this year" when the fund stood at $1.6 billion.

By the end of 2008, the trust fund balance had fallen to $1.3 billion, Pauken said.

So we'd have still had a deficit, but it would have been $300 million less had it not been for Perry's profligacy, the consequences of which no one could have possibly foreseen last year, when the economy was still peachy. Yeah, that's the ticket.

Posted by Charles Kuffner on January 22, 2009 to Budget ballyhoo

It's not just RP. Texas' entire UI system is set up upside-down. When times are good, and employers could afford to refill the fund, they don't have to. Then, when times are bad, employers get hit. Or we borrow, and they get hit harder later. Totally bassackwards.

P.S. It's Bill Hammond's design.

Posted by: David Siegel on January 22, 2009 11:12 PM

It's the same with other entitlements, like Medicaid. In good times when tax revenues are up, there's more money for the programs. In bad times when people need it more, revenue is down.

Posted by: Xanthippas on January 24, 2009 9:41 AM
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