Governor Perry’s grandstanding rejection of the federal stimulus money for unemployment insurance is going to cost us all more and more.
Texas is preparing to borrow as much as $2-billion to pay for unemployment insurance benefits. That’s what the chairman for the Texas Workforce Commission told KERA in a recent interview. KERA’s Shelley Kofler reports employers who fund benefits can expect a tax increase, too.
The fund that pays unemployment benefits to Texans ran out of money this month. That forced the state to take out the first of several no-interest, federal loans that will total some $643 million- just to pay benefits through September. Then what? Workforce Commission Chairman Tom Pauken says the state will borrow more. A lot more.
Pauken: We are looking at putting a bond in place probably next year in excess of a billion and we could look at a bond in the range of a billion and a half or $2 billion.
Kofler: The state of Texas may have to borrow $2 billion?
Pauken: Yeah, that could well be the case in terms of a bond over a seven-to-10 year period.
Pauken wants to stretch the repayment of $2 billion plus interest over at least seven years saying that might limit a huge spike in the tax rate employers pay to support the benefits fund. But for employers, Pauken says there’s no escape.
Pauken: Oh, they are going to have to pay more next year. 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.
Remember, business owners, you will have Governor Perry to thank for this. Now even if we had accepted the stimulus money for unemployment insurance, we’d still be short of what we need to handle the increase in claims. Of course, a big part of the reason for that was because the Texas Workforce Commission stopped collecting the replenishment tax for the unemployment insurance trust fund, which is now broke, back when times were better, because of course the good times always last forever. That was done at the behest of Governor Perry, as Sen. Watson helpfully reminds us. So pretty much every decision Perry has made regarding unemployment insurance has wound up costing businesses money. He’s claiming we may not have to borrow quite as much as $2 billion, but given his track record so far, why should anyone believe him? More here.