State unemployment fund runs out - KCBD NewsChannel 11 Lubbock

7/16/09

State unemployment fund runs out

Posted:
State Representative Delwin Jones State Representative Delwin Jones

By Brittany Pieper  - bio | email

LUBBOCK, TX (KCBD) - State officials expect the state's unemployment insurance trust fund to run out of money by next week, and the state's unemployment rate is worse than it's been in years.

Everyone who receives unemployment should still get their benefits. However, those who already received up to 59 weeks of unemployment and now have a 13 week extension will see a delay. "The recession has caused a lot of lay-offs. Lay-offs cause unemployment benefits to be paid out because people are out of work. When there's a payout the fund starts declining," said State Representative Delwin Jones. 

To continue to pay unemployment benefits to about 82,000 Texans, the state will borrow almost $650 million from the federal government to cover claims. State officials estimate this money will last through October. After that, Jones says the state will issue bonds, "They have authority to issue bonds for two purposes: to repay the $650 million and to continue payments to the unemployed people."

Those bonds, and the federal loan, must be paid back somehow. Jones says the burden will fall on the shoulders of employers like Tim Gafford, who owns Gafford Pest Control and employs about 20 local residents. 

Gafford sympathizes with those who lose their job, but says small business owners like himself can't afford to take on the burden. "Taxes are getting to the point where it's getting very difficult to do business," said Gafford. 

Jones says employers will see a higher unemployment tax rate, "I think they'll be significantly increased. They'll have to pay the bonds." Since Jones first took office more than 40 years ago this has happened before but not to this magnitude, and its employers who ultimately have to pay.

Critics of Governor Rick Perry say he should have accepted the $556 million in federal stimulus funds to avoid this situation. Jones says he thinks Perry should have accepted the stimulus money, but he says it would have only postponed the unemployment fund running dry, not prevented it. State Representative Carl Isset says he agrees with Perry in not taking the stimulus funds.

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