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Press Release
March 12, 2009
Contact: Doris Sanchez, Press Secretary
(512) 463-0385
Senators Blast Perry for Rejecting $555 Million in Unemployment Aid
Experts predict Texas will lose 180,000-300,000 jobs in 2009

(Austin) — Senators Rodney Ellis (D-Houston), Eliot Shapleigh (D-El Paso), Leticia Van de Putte, Wendy Davis (D-Fort Worth), Mario Gallegos (D-Houston), Royce West (D-Dallas), Judith Zaffirini (D-Laredo) and Senator John Whitmire (D-Houston) today blasted Governor Rick Perry's callous decision to reject $555 million in aid to unemployed Texans offered by the Economic Recovery Act.

While Texas does not yet face double digit unemployment – like Michigan, California, Rhode Island and South Carolina – the economic forecast is not rosy. According to the Texas Comptroller of Public Accounts and the U.S. Federal Reserve, the Texas economy will lose between 180,000 to 300,000 jobs in 2009, and the unemployment rate is expected to rise from 6 to 8.2 percent.

"Governor Perry's decision to reject the $555 million in unemployment aid is simply deplorable," said Senator Ellis. "Texas families are hurting and are worried about how they are going to keep their homes and pay their bills. Today, Governor Perry told them: 'good luck with that.' If the Governor won't do his job, we'll have to go around him, and I am prepared to do just that."

"By October, more than 300,000 Texans will be out of work," said Senator Shapleigh. "Unemployment will be at 8 percent. To reject funds targeted to families in tough times is profoundly irresponsible. We will fight hard to get a Senate resolution passed to make sure Texas puts families back to work."

"Governor Perry's decision will harm Texas families," said Senator Van de Putte. "With 26,000 Texans filing new unemployment claims each week, Texans need help now. The unemployment fund is already running low and will reach zero by October 1st. Why would Governor Perry place the burden on already stressed employers to make up the shortfall? I am amazed that Governor Perry would put partisan interests above the interest of already unemployed Texans and those who will unfortunately lose their jobs due to this economy."

"After declaring his unconscionable decision today to turn away $555 million in unemployment relief meant for a rapidly increasing number of unemployed Texans, Governor Perry will be resting comfortably tonight in a home paid for by Texas taxpayers," said Senator Davis. "As he does, families throughout this State will be huddling at their kitchen tables, pouring through mounting unpaid bills and wondering how they are going to survive. Meanwhile, Texas businesses will be asked to clean up the mess as they face a tax levy that will be required to shore up the Texas unemployment insurance fund. The only interest insured through this action is the advancement of Governor Perry's own political agenda, achieved at great cost to the honest Texans whose agenda he was elected to represent."

"The decision by Governor Perry to reject this much needed funding was done without consideration of the numerous and steadily rising number of Texans who rely on these benefits to get them through these tough economic times," said Senator Gallegos. "I'm ashamed of the decision that has been made by the Governor, putting an extra burden on hard working Texans."

"Sometimes you must look beyond your own perspectives to see the world as others see it" said Senator West. "At a time when many Texans face uncertain financial futures due to job loss, extended relief in the form of unemployment benefits can help Texas families to weather the storm," said Senator West. "From a broader perspective, Texas faces a projected budgetary shortfall in the billions. Dollars saved in one area can be applied to other areas of need."

"These federal stimulus funds would assist Texans who are unemployed through no fault of their own," Senator Zaffirini said. "The economic outlook is dire, and any measure that would qualify deserving persons for unemployment insurance benefits is the right and moral approach.

"That is why I filed Senate Bill 945, which would expand eligibility for unemployment insurance benefits as defined by the Labor Code, allow for an alternative base period to be used when determining eligibility so that any of four of the last five quarters would be used in determining eligibility for unemployment insurance benefits, allow persons seeking part-time work to qualify for partial benefits and permit persons who are unemployed due to spouse relocation unrelated to military service to receive benefits."

"I strongly disagree and am disappointed on behalf of the thousands of unemployed Texans," said Senator Whitmire. "They deserve better and Texas deserves better."

Texas' unemployment insurance fund faces a massive shortfall which, without swift action, could lead to an automatic tax increase on Texas businesses. Under Texas law, the insurance trust fund has to maintain a certain balance -- today, approximately $850 million. If the fund falls below that threshold, a "deficit" tax is levied on nearly all Texas businesses.

According to the latest estimates, by September 2009 Texas unemployment trust fund will have reserves of only $100 million – about $750 million below the floor. In addition to the tax increase, the shortfall could mean an end to important economic development programs, including Governor Perry's Enterprise Fund.

To take advantage of the federal stimulus aid, Texas must:

  • Join 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.
  • Allow 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.
  • Pass 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.