Office of the Governor Rick Perry

Texas making right decisions on unemployment insurance, without federal strings

By Governor Rick Perry
Friday, July 24, 2009  •  Editorial

Texas is standing strong to protect and maintain unemployment insurance (UI) benefits for workers suffering the effects of the national recession. Our UI trust fund will be sustained, individuals and families in need will receive the benefits they are entitled to, and Texas job-creators and taxpayers will be protected from federal mischief.

The Texas economy is the strongest in the nation. Our unemployment rate is 2 percent lower than the national average, and employers continue to relocate and expand in Texas.

However, I am fully aware that because of the national recession, too many Texans are out of work or uncertain about their economic future. That’s why I, state lawmakers and leaders at the Texas Workforce Commission, have worked hard to keep our unemployment trust fund sound, adequately funded and safe from the meddling of Congress, the Obama Administration and federal bureaucrats. 

Recent weeks have seen a flurry of news stories regarding unemployment benefits in Texas. Taken as a whole, they have painted a confusing and incomplete picture of unemployment insurance in our state.  Here are the facts:

Texas unemployment benefits are safe. Unemployed Texans are and will continue to be covered thanks to a combination of additional contributions from Texas businesses in the form of unemployment taxes, bond financing and borrowing of federal funds. As in previous recession years, these tools will be used to keep the trust fund financed.   

Texas employers know that state officials work to keep UI taxes low to encourage job creation. But when the need arises, businesses are required to pay more into the unemployment compensation system.  Borrowing from the federal unemployment fund – which employers pay taxes to maintain – is also routine. Texas borrowed such funds during the 2003 national recession and in prior economic downturns.  At least 15 other states are doing or preparing to implement similar federal borrowing. 

We are also utilizing some “no-strings” funding available in the federal stimulus package. This allows Texas to provide an additional $25 per week in benefits to qualified unemployed Texans, resulting in an additional $161 million for the program and weeks of extended benefits for Texas workers. 

I did reject $555 million in federal stimulus dollars that would have mandated the State of Texas to pay costlier benefits and put higher taxes on Texas employers indefinitely. Even if we had accepted these stimulus funds, Texas would have still seen higher unemployment taxes, bond financing and federal borrowing to keep benefits from the UI Trust Fund flowing. 

But in return for less than seven weeks of unemployment benefits, this $555 million stimulus payment would have required Texas to permanently expand its unemployment program and burden Texas job creators with higher taxes for the long haul. Those stimulus dollars would have done more harm than good for Texas workers, employers and taxpayers, which is precisely why the Texas Association of Business and National Federation of Independent Business urged and supported my decision to reject the federal unemployment stimulus funds.

If Washington really wanted to help Texans, they would have sent us this money without strings attached like the Bush Administration did in 2002.

I have heard from thousands of Texans, both employed and unemployed, who agree that rejecting the unemployment stimulus funds was the right move for Texas. Sam from Dallas wrote, “I have been out of work because of this economy and I implore you, please do not accept the stimulus money…This is a short-term tactical fix that has major flaws if viewed strategically.”

Michelle from Tyler wrote, “I have been a recipient of unemployment within the past two years and our laws and requirements are more than adequate…to further burden our employers with more unemployment tax at some point in the future would be a huge mistake.”

These Texans represent a few of many who understand that our current unemployment system provides sufficient benefits to help unemployed Texans as they pursue employment.

The fact remains that qualified Texans who lose their jobs through no fault of their own will continue to receive unemployment benefits and job search assistance from a Texas Workforce Commission that stands ready to help.

My decision to reject strings-attached federal stimulus funds was the right choice for Texas. Most Texans know the best solution for unemployment is job creation, not government mandates. We will utilize all of the traditional financing tools necessary to ensure eligible Texans continue to receive the unemployment benefits they need while minimizing the burden on workers and employers, freeing them to create new jobs and lead our country into a more prosperous future.

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