More about Texas Refusing to use stimulus money for unemployment payments

Why Workers Were Left Out to Dry in Texas

by Olga Pierce, ProPublica - March 13, 2009 4:57 pm EDT

Gov. Rick Perry (Office of the Governor Rick Perry)

Texas Gov. Rick Perry officially rejected money from the stimulus bill when he turned away $550 million that would have expanded unemployment insurance benefits.

As we have pointed out in the past [1], this is interesting, given that in Texas only one in five unemployed workers receives benefits—a percentage that earns the state the rank of 49th out of 51 jurisdictions. The federal funding would pay for benefits for 45,000 Texans who otherwise would not qualify.

Perry and other governors who also have threatened to refuse [2] the unemployment insurance funding say the bill would force them to raise taxes on businesses to sustain the expanded benefits in two years, when the federal money runs out.

That part could be true. States have to change their laws to qualify for the money. And despite claims to the contrary, even by some members of Congress [3], the bill’s language prohibits a sunset provision. In other words, you can’t write a law that specifically expires as soon as the federal money runs out.

There would, however, be nothing—other than public opinion and political will—preventing states from scaling eligibility back down.

But what are the changes in the bill? Are they so vile that they should be reversed as soon as the recession ends?

Here is a guide to the provisions [4] (PDF):

• Every state hoping to get funds must begin calculating eligibility for unemployment insurance using something called an alternative base period. All but 12 states currently require workers to have earned a fixed amount in the first three of the last four quarters to qualify for benefits. This dates back to the olden days, when it took time to wrangle paper records. Problem is, it often excludes people in lower income brackets who earn a lower wage and tend to cycle in and out of work. (Wealthier people tend to hit the earnings requirement more easily.) The alternative base period would allow the beginning and end of the assessment period to be adjusted so people are not ineligible on a technicality—and many advocates for low-income workers think this change should have been made a long time ago.
• States are also required to do two of the following: cover part-time workers; cover people with compelling family reasons to leave their jobs, such as domestic violence or a sick child; cover people in job training programs; or offer beneficiaries at least $15 per week extra for each dependent child.

While some states are rejecting funding, other states are embracing the stimulus package. Iowa became the first state to pass a law qualifying it for the extra money. As a result, $70 million in federal funds will soon be deposited in Iowa’s unemployment insurance fund.