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Clements in a Corner On Unemployment Tax Governor expected to call special session after election By Greg Enos Austin Some call it “feistiness,” others “meanness,” but everyone who has ever tangled with Governor Bill Clements knows that he does not take kindly to criticism. In the last month Gov. Clements’ combativeness has apparently triumphed over his political sense, and he now finds himself in sharp disagreement with his most important constituency big business. At issue is a projected 1800% increase in the unemployment compensation tax all Texas businesses pay. The Texas Employment Commission estimated in June that increased joblessness would drain the Unemployment Compensation Fund far below its statutory “floor,” triggering an 1800% tax hike. Galveston State Representative Lloyd Criss, who has closely followed the fund’s problems, had warned Clements as early as February that a major tax increase was likely. Immediately after the TEC projection was released, Criss criticized Clements for, “ignoring the problem until it became a crisis.” Rep. Criss pointed out that most Texas businesses which now pay $6 annually per employee would owe $114 per employee in 1983. That kind of increase, according to Criss, would, “bankrupt many marginal firms, thereby increasing unemployment further, and inevitably increase prices for consumers.” Criss’ charges and the projected tax increase received state-wide publicity. Governor Clements, in Criss’ view, “acted like a street brawler who’s been popped; he hit back without thinking.” Clements hit back by calling the projected increase a “false issue” and charged that it was made by a “bureaucrat whose motives are suspect.” Clements told a Fort Worth paper, “I suspect trying to use their crystal ball for their own purposes.” The governor ordered his staff to audit the TEC figures. When his own men reported back that the projection was valid, Clements refused to alter his public position. He continued to call the increase a “false issue” even as he criticized two of the three TEC commissioners for not warning him earlier. Commissioners Ken Clapp and Nolan Ward, who are not Clements appointees, responded by releasing to the press copies of a letter all three commissioners had sent Clements on November 14, in which they warned him the fund was in danger. Attorney General Mark White, Clements’ Democratic opponent, began to include the tax issue in his campaign. At a series of speeches around the state in front of TEC local offices, White claimed the tax increase was just one example of the Governor’s “leadership by crisis” style. While White and Clements were slugging it out on the political trail, Rep. Criss continued to study the situation. He soon realized Clements had made a serious blunder in casually dismissing the TEC projection. Criss knew that the Unemployment Compensation Act required the tax to increase 100% for every $5 million the fund was below $225 million. The two-term Democrat checked the TEC’s latest figures and found that the number of Texans receiving benefits and the monthly payment had increased dramatically throughout the summer. In July, the fund paid over $56 million to some 70,000 unemployed, three times the amount paid out in July of 1981. Criss had an independent computer projection made of the TEC data. He was told the tax increase could range from 1200% to as high as 2400%, with an increase in excess of the original TEC estimate likely. While the governor moved on to other issues, Criss began mailing a detailed report explaining the tax increase in layman’s terms to other members of the House and to business leaders across the state. Businessmen, used to making decisions on the basis of figures and projections, responded with surprise and alarm. The general manager of Todd Continued on Page 14 8 SEPTEMBER 3, 1982