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You can pay me now, or you can pay me later

Odds are, we’ll opt for later to deal with the large deficit we’re facing with the unemployment insurance trust fund.

Texas’ jobless-benefits fund is empty, and the state will probably borrow $1.5 billion from the federal government to pay benefits through December, a state official said Tuesday.

But it’s unclear when Texas employers will have to pay a much higher tax to repay the loan and rebuild a required $863 million cushion in the unemployment compensation trust fund.

A second Texas Workforce Commission official and an outside expert said the brunt of expected higher taxes might not sock employers until 2011, after the worst of the recession passes and well past the March primary for Gov. Rick Perry.

A key driver of higher tax bills for employers – though not the only one – in the next few years will be a “deficit assessment” to restore the fund to fiscal health.

“The commission can use its discretion in minimizing the tax impact to Texas employers,” said Workforce Commission spokeswoman Ann Hatchitt.

[…]

Hatchitt said some time this fall, the state will decide whether to postpone a deficit assessment until 2011. Commissioners will probably decide at the same time their schedule for issuing bonds, possibly next year, she said. Bond proceeds — a figure of $2 billion has been widely mentioned — would repay funds Texas is borrowing from the federal government.

At Tuesday’s monthly meeting of the three-member commission, chairman Tom Pauken of Dallas pressed the agency’s chief financial officer, Randy Townsend, for an estimate of how much the state will borrow from the feds by Dec. 31. Townsend indicated it would be about $1.5 billion.

Texas won’t have to pay interest on the federal loans until January 2011.

Don Baylor Jr., an employment policy expert, said that if the commission postpones a deficit assessment until 2011, that will force more borrowing from the federal government next year, just to pay ongoing benefits to laid-off workers.

And in 2011, employers would pay not only a deficit assessment but also the first installment of a “bond obligation assessment” lasting several years, said Baylor, who works for the Center for Public Policy Priorities, which advocates for low- and middle-income Texans.

It is reasonable to defer the cost of refilling the trust fund until after the economy recovers, which means that Governor Perry better hope that President Obama’s plans to get things back on track succeed. Of course, if Perry hadn’t so foolishly suspended collection of the replenishment tax back when times were still good, we’d be in less of a pickle now. And the longer we defer the pain, the more we’ll have to borrow in the interim, and the more we’ll have to pay back in the future. The next biennium’s budget is under enough stress already, and this will just add to that. But at least we’ll get to deal with it after the GOP gubernatorial primary. That’s what really matters, after all.

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