p olitical posturing aside, Perry’s “rejection” of the unemployment funds is far from the final word, because he holds one of the least-powerful governorships in the country. For Texas to receive the federal funds, the state has to change its unemployment eligibility lawsand changing laws, not to mention making budget decisions, is the domain of the Legislature. Because the Legislature is in session, Perry’s “rejection” is actually a threat to veto bills expanding unemployment benefits. Legislators who favor taking the money have been furiously authoring and debating unemployment insurance bills in a rush to pass them with enough time to override Perry’s likely veto before the end of the session. \(The Legislature can’t, under Right-wing lawmakers such as Rep. Dan Gattis, a Georgetown Republican, argue that accepting the money amounts to a short-term fix that will result in a long-term drain on employers and the Texas economy. “We’re looking at a payday loan:’ Gattis said in a recent debate organized by the conservative Texas Public Policy Foundation. “I don’t think anyone in this room would fall for the proposition of ‘I will give you $555 today if you will give me $75 a day from here to eternity:” On the left side of the debate, Rep. Jim Dunnam, a Waco Democrat who’s chairing a select House committee on the economic stimulus, argues that Perry is denying employers a half-billion-dollar gift during a recession. Perry “is doubling the tax on the businesses at the time when they least need it,” Dunnam told reporters in March. Somewhere between Gattis’ and Dunnam’s positions is where most of the pushing, pulling, needling and negotiating is taking place. As the Legislature began scrutinizing unemployment insurance anew, the governor’s office found itself plunged into yet another controversy. For the past four years, Perry has used the dwindling unemployment trust fund to bankroll his Texas Enterprise Fund, which grants taxpayer money to big businesses to induce job creation. Critics have called it Perry’s “slush fund” and “corporate welfare:’ In all, $460 million of unemployment money has been funneled into the Texas Enterprise Fund since 2005, when Perry snuck a little-noticed bill through the Legislature authorizing the transfers. In recent hearings, lawmakers have raised the roof over $50 million of unemployment funds sent through the Enterprise Fund to build a new biotech center at Texas A&M, Perry’s alma mater. “It seems like every day that we go through this thing, it gets more disturbing,” said Rep. Jim Pitts, a Waxahachie Republican who chairs the House Appropriations Committee. Despite all the hubbub, accepting or rejecting the $555 million won’t have a huge impact on Texas businesses. With unemployment claims rising, employers will have to pay higher taxes regardless. That’s the way the system works: When a recession hits, unemployment payouts go up, and businesses foot the bill. Texas must continue to pay out benefits one way or another, says Workforce Commission spokesperson Ann Hatchitt. The state will raise money for the fund, as it has in the past, probably by floating a fiveor seven-year bond that will be repaid by a tax increase on businesses. The unemployment trust fund will need, by some estimates, an infusion of at least $2 billion over the next yearand perhaps another $2 billion in 2011. That will nearly double unemployment taxes on Texas businesses, according to recent Workforce Commission estimates. The federal stimulus money can only shave off a fraction of that tax increase. If Texas takes the stimulus money and expands its benefits eligibility laws, taxes on employers will be slightly lower during the recession and slightly higher in the long term. If Texas doesn’t take the stimulus money and doesn’t expand eligibility, the opposite will be true: Taxes on employers will be slightly higher during the recession and slightly lower \(with fewer The key word is “slight:’ How slight? The estimated difference in the 2010 business-tax rate between the two scenarios works out to $11 per employee. In 2020, it works out to about $4.50 per employee. Of course, no one is really bickering about a few dollars’ difference in employer taxes, which rise and fall for many other reasons. While the stimulus money makes a great political football to kick around, in reality it’s little more than a small bribe to make Texas bring its unemployment system into the 21st century. That’s the real issue, and the real reason Perry wants to and big business want to keep the state’s unemployment system unchanged. Many others argue that Texas should be more generous with its benefits. It’s a debate that’s long overdue. For years, Texas has been a terrible place to lose your job. No state in the country is stingier with its unemployment benefits, with only about 20 percent of unemployed Texans receiving them. That’s slightly more than half the national average of 37 percent, ranking and newspaper editorial boards denounced the governor. A New York Times editorial called Perry, Louisiana Gov. Bobby Jindal, and other Republican governors rejecting stimulus money “grandstanders.” The Times characterized their decisions as “posturing” that puts “ideology ahead of the needs of their constituents.” Even President Barack Obama chastised the governors for putting politics over good sense. Many observers believe Perry’s rejection of the stimulus money had more to do with the 2010 governor’s race than anything else. U.S. Sen. Kay Bailey Hutchison will almost certainly run against Perry in the GOP primary. The governor’s rejection of the stimulus money was, at least partly, a play to the GOP’s right-wing basehis baseas he attempts to frame Hutchison as a big-government Washington spender. \(Hutchison, having voted against the stimulus bill, doesn’t really fit the part. But she has cautiously suggested that Perry, in rejecting the funds, 17 THE TEXAS OBSERVER APRIL 17, 2009
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