Texas Unemployment Funds Dry Up

Texas forced to borrow anyway

Texas might be happier for the federalist system this week. It had to borrow $160 million from the federal government to make up for a shortage in unemployment benefits. Gov. Perry had previously refused $550 million in federal stimulus funds.

The financial strain on the unemployment system became more acute when the jobless rate in Texas leapt from 6.6 percent in April to 7.1 percent in May.

"While our unemployment rate rose in May, it does remain 2.3 percentage points below the national rate, and Texas experienced job growth in education and health care," said TWC Commissioner Representing the Public Andres Alcantar.

Despite the optimistic outlook, the length of time many are spending in between jobs has increased, meaning people are collecting unemployment for longer periods. Legislation passed earlier this year gave people who have been unemployed for a year a 13-week extension. It is those 82,000 unemployed Texans who will have to wait for borrowed benefits.

Many are arguing that Perry should have just accepted the funds in the first place, but Perry has maintained his Texas-rules stance.

"Just because Washington, D.C., thinks it's a good idea does not mean it's a good idea for Texas," he told the Associated Press.

He believed the strings attached to the stimulus funds would have been too burdensome in the long run.Those strings included:

  • Joining 21 other states – including New Mexico, Oklahoma, Georgia, North Carolina, and Virginia – in modernizing the way it calculates unemployment benefits. Texas currently disregards the most recent three to six months of a worker's earnings when calculating eligibility – a practice only needed when claims were processed manually.
  • Allowing those seeking part-time work to be eligible for pro-rated benefits. When the economy bounces back, many of the new jobs may begin as part-time employment and eventually become full-time. Nearly half of the states currently award benefits to part-time workers.
  • Passing family-friendly legislation to allow benefits for spouses who quit their jobs because their wife/husband is transferred to another part of the state. The Legislature already made this change for military spouses.

Texas will now likely borrow between $493 million between this month and October 1 and take out $2 billion in bonds to pay it back. Taking out bonds could spell tax increases on business, a repercussion Perry stated he wished to avoid by rejecting stimulus funds.

Officials have assured recipients that payment of funds is not a matter of if but when. 

Holly LaFon has written and worked for various local publications including D Magazine and Examiner.

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