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March 16, 2009
Note to Austin: Everyone take a deep breath, drop your gloves and retreat to your corners. There's a way for the state to accept federal stimulus money to help unemployed Texans without forcing businesses to pay higher taxes forevermore to the state's unemployment insurance fund.
In fact, the compromise being offered by Bill Allaway of the Texas Taxpayers and Research Association could become a classic win-win. Here's how it would work, as Allaway outlined in legislative testimony and during an interview yesterday:
First, Gov. Rick Perry should accept the approximately $550 million being offered by the Obama administration to help the state finance its payments to unemployed workers. Federal strings on that money would require Texas to create new ways of helping the unemployed, including offering benefits to part-time workers. Generally, federal strings are not a good thing, but the economy being what it is, Texas workers need special help, too.
The state also could use the funds to stop a tax hike for the businesses that finance Texas' unemployment insurance fund. That fund is running out of dollars. Unless Perry accepts the federal money, companies soon must pay more to bail out the fund.
Second, Perry's right: Texas shouldn't lock itself into expenses it perhaps can't afford over the long run. That's why legislators should establish a committee to examine the unemployment insurance fund.
Austin hasn't given it a good going over since the 1980s, and reports exist of millions of dollars in fraud – some say as high as $150 million. The committee could take the next 18 months and report to the 2011 Legislature how to improve the system, including curbing fraud. Lawmakers then could decide whether to snip or keep the stimulus strings.
Both sides actually have good points in this fiery debate. Democrats like Rep. Jim Dunnam want the state to help unemployed workers with every federal dollar available. Perry wants to keep the state from being socked with a new liability when those dollars expire.
Allaway, fortunately, has a way both sides can win. His compromise is the way forward.
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