Stimulus Money and Unemployment Insurance

March 27, 2009

State Representative Phil King

Last Thursday, Governor Rick Perry announced his opposition to $555 million in federal economic stimulus money to expand the state’s unemployment insurance program. As many of you know, I have been adamantly opposed to the Federal Stimulus Package from the beginning, because it represents terrible economic policy. My stance on the $555 million for unemployment compensation was a more difficult decision, one that I have struggled with over the past several weeks. But, after exhaustive study, I have concluded that Gov. Perry’s position is the best for Texas, and I will defend that action in the House.

I wholeheartedly agree with Gov. Perry’s decision for many important reasons. First and foremost, the federal strings will ultimately cost Texans more money than they would receive by forcing Texas to:
1) Expand unemployment benefits to those seeking only part-time employment,
2) Compensate workers who resign to care for a ill family member, or;
3) Reverse welfare reform by paying additional money, per child, that a worker has at home.

We fully recognize that Texans are facing difficult times. Hard-working individuals that have been adversely impacted by the economic recession deserve assistance in the form of unemployment compensation, and the Legislature will continue to fully fund the unemployment trust fund.

It is difficult to think about turning down such a large amount of money, but it is incredibly important to understand that these accepting the $555 million would require a change in the state’s definition of unemployment, expanding coverage to more people and placing more of the state’s tax burden on employers. Texas has already accepted money with no strings attached, which will increase unemployment benefits by $25 a week for most of 2009.

It is no accident that Texas led the nation in job creation in 2008, has more Fortune 500 companies calling Texas home than any other state, and has continued to draw businesses to Texas even with the slowing economy. This is no time to abandon the principles that have led to our success: keep the burden of government low and the regulatory and tax climate predictable, making Texas the place that people want to invest their capital and create jobs for hardworking Texans.

Opponents of Gov. Perry argue that the Texas Unemployment Trust Fund continues to decline and we need the stimulus dollars to rebuild its equity. It is a fact, that regardless of whether or not we take the federal stimulus money for unemployment, we will need to find alternative means to protect our trust fund for unemployed workers. The Texas Workforce Commission currently has the capability to prevent the bankruptcy of this fund, and it would be a very poor policy decision to expand its obligations if it is already going to need to take out loans or raise taxes on business to remain solvent.

President Ronald Reagan once said, “Government doesn’t solve problems; it subsidizes them.” This is not the time for expanded government programs, that within five years will become unfunded mandates from the Federal Government. These are difficult times for people all across the entire country, but Texas, above all other states has a proven ability to create jobs and remain an economically viable environment for businesses Texas workers.