Press Release
From the Office of State Senator Rodney Ellis

For Immediate Release
February 26, 2009
Contact: Jeremy Warren, (512) 463-0113

Senators Ellis, Lucio, Van de Putte, Representative Deshotel Urge Governor to Designate Unemployment Insurance Reform an Emergency
Legislators have each offered bills to modernize Texas unemployment insurance

AUSTIN — Senator Rodney Ellis (D-Houston), Senator Eddie Lucio (D-Brownsville), Senator Leticia Van de Putte (D-San Antonio) and Representative Joe Deshotel (D-Beaumont) have sent a letter to Governor Rick Perry urging him to designate reform of the Texas Unemployment Insurance System an emergency for the 81st Texas Legislature. Each legislator has filed legislation to improve Texas' unemployment insurance system.

While Texas does not yet face double digit unemployment, as Michigan does, the economic forecast is not rosy. According to the Texas Comptroller of Public Accounts, the Texas economy will lose 111,000 jobs in 2009, and the unemployment rate is expected to rise from 6 to 8.2 percent. The recently passed Economic Recovery Act offers $555.7 million to Texas to shore up its shaky unemployment fund, but the state must first pass a series of reforms to be eligible. Unfortunately, even as Texas accepts stimulus funds, some continue to say the state should reject unemployment funding, simply because it requires small changes to the program.

"I've heard the concerns that the unemployment funding in the federal stimulus package come with 'strings attached', and I don't care," said Ellis. "To a Texan who has lost a job and worries how they are going to keep their home and pay their bills, that aid isn't a string, it's a lifeline – one which will help their family get through hard times."

"It's unfair and unnecessary to burden families and businesses with hundreds of millions of dollars in extra taxes and bond debt," said Lucio. "The unemployment legislation I've proposed with my colleagues Senators Van de Putte and Ellis is a quick and smart way to energize the economy and to help Texans struggling to support themselves. The fact is, fixing our unemployment insurance system helps fix our economy."

"The number of unemployed Texans has risen by 132.2% since last year, these Texans are hurting now, this isn't an abstract ideological debate for them," said Van de Putte. "The unemployment stimulus money can make a real difference in their daily lives. We owe it to them to pass this legislation, they can not wait and neither should we."

“Texas can ill afford to turn down over one-half billion dollars targeted to bring relief to the tens of thousand Texas families negatively impacted by this global economic crisis,” said Deshotel.

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: