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Texas Workforce Commission

Paxton’s cronies

This guy really is a piece of work.

Ken Paxton

When seeking a job at the Texas attorney general’s office, it’s less about what is on your résumé than who you know.

In Attorney General Ken Paxton’s first weeks in office, he filled his higher ranks with at least 14 people connected to him and other prominent Republicans — quiet “appointments” that his office defends in spite of state law, which requires that jobs be advertised when they’re filled from outside the agency.

An American-Statesman review of more than 1,800 pages of personnel files reveals that hiring procedures were relaxed or altogether ignored for those who had worked for Paxton, former Gov. Rick Perry or U.S. Sen. Ted Cruz. Records show several were hired weeks before they had even applied for the jobs, if an application was completed at all.

Meanwhile, people whose résumés didn’t include political connections often faced months of red tape, interviews and vetting — just the sort of competition that state law envisions for coveted state jobs.

It is not uncommon for elected officials to ignore a decades-old law meant to prevent political patronage in Texas, but the number of Paxton’s so-called appointees is notable, and correspondence obtained under the Texas Public Information Act suggests Paxton was promising lucrative jobs to his political allies months before he took office.

[…]

The Statesman asked three state agencies how state law might allow for “high-level appointments,” as Paxton’s office called them. None would provide answers.

The Texas Workforce Commission, the designated arbiter for job postings, deferred to the attorney general’s office, which stopped answering questions from the Statesman for this story. The Texas Legislative Council, whose lawyer assists legislators in drafting laws, deferred first to the attorney general’s office, then back to the Texas Workforce Commission.

The commission’s spokeswoman, Lisa Givens, said her office provides no guidance or oversight to ensure state officials are following the law. They just take what other agencies send them and post it.

“We don’t enforce the rule,” she said. “We accept the postings. There’s no enforcement in this provision.”

Givens did note, however, the statute says “any agency, so that would be any agency.”

Because the law is 25 years old, wrapped into two omnibus revisions of chunks of state law, it has received little attention in recent years. But earlier this year the Senate Research Center, providing context for another bill, was succinct in its interpretation: “State agencies are required to list job openings with the Texas Workforce Commission.”

“The job posting requirement is black and white,” said Craig McDonald of Texans for Public Justice, the left-leaning watchdog group whose ethics complaint against Paxton spurred an ongoing grand jury investigation into possible securities violations.

“In Texas, cronyism is allowed,” McDonald said. “But you have to at least follow the rules.”

Still, an official determination on whether Paxton broke the law can only come from the attorney general himself.

Isn’t that special? Read the whole thing, it’s a nice piece of reporting. There’s not much else that can be done, though perhaps if he’s still claiming to caer about ethics, perhaps Greg Abbott could add this to the Lege’s to do list in 2017. Beyond that, if nothing else this serves as further evidence, as if it were needed, that Paxton has the ethical and moral compass of a Russian hacker. His downfall, when it finally happens, is going to be epic.

HISD should not be on the hook for North Forest’s liabilities

Come on!

Fourteen months after the Texas Education Agency ordered Houston ISD to take over the long-troubled North Forest school district, some unexpected disputes over funding have surfaced.

The Houston school board has authorized its attorneys to challenge a Texas Workforce Commission ruling that the district owes more than $3.7 million in unemployment benefits to former employees of the North Forest Independent School District.

In addition, HISD has not yet received enough state money to rebuild North Forest High School and an early childhood center in the area, though district officials say they expect to have sufficient funds in coming years to complete at least the high school project.

[…]

Texas Education Commissioner Michael Williams ordered the 6,700-student North Forest school district to be closed and annexed to HISD on July 1, 2013, after years of academic struggles and financial problems.

David Thompson, an attorney who represents HISD, said the district should not be responsible for reimbursing the state for unemployment benefits because the North Forest employees never worked for HISD. The Texas Education Agency did not require HISD to hire any North Forest staff.

The unemployment claims totaled $3.7 million as of June 30, according to HISD.

“We think we’re right on the law,” Thompson said, adding that he expects the district to file a lawsuit against the Texas Workforce Commission to appeal having to reimburse the commission for the claims. “Three million dollars pays for a lot of teachers, a lot of supplies.”

The HISD school board voted Thursday to authorize next steps to appeal the commission’s ruling.

HISD officials said they did not know how many North Forest employees filed unemployment claims, but it’s likely hundreds. North Forest ISD employed about 850 people before it closed.

Look, HISD did not volunteer for the duty of annexing North Forest. It was imposed on them by the state. I’m not arguing the merit of that decision – I happen to think it was a good call – but let’s be honest, this is a challenge for HISD. To add to that challenge by imposing North Forest’s unpaid bills on HISD is unconscionable, and that’s before we take into account the Lege’s draconian cuts to public education in 2011 and the state’s extremely flush coffers at this time. Seriously, why are we even arguing about this? The state should make good on these unemployment claims already.

Pauken for Governor

We have our first official non-fringe candidate for Governor next year.

Tom Pauken

Saying he hoped to reunite the “Reagan coalition of social and economic conservatives,” former Texas Workforce Commissioner Tom Pauken confirmed to the Tribune that he will file to run for governor in 2014.

“I like [Gov.] Rick Perry. I like [Attorney General] Greg Abbott,” said Pauken, a former chairman of the Texas Republican Party who also worked in the Reagan administration. “I don’t know what they’re going to do. One or both may run. I’m going to run on issues.”

Pauken’s intention to run for governor was first reported by The Dallas Morning News.

He touted his recent work building support for education reform and emphasizing the importance of vocational training.

“On issues where there’s common ground, let’s bring Texans together,” he said.

Pauken said he wants to get a group together to look at the school finance system, which he said needs an overhaul. “We have a flawed Robin Hood system that was flawed from the beginning,” he said. “It hasn’t gotten better. It’s gotten worse.”

He said the state needed to focus its attention to essential services, such as its transportation infrastructure. He also said Texas needs to become less reliant on high property taxes, and he indicated that he is a strong proponent of term limits for statewide politicians.

“I also think there’s too much crony capitalism out there,” he said. “I think that’s a problem at the federal level, but I think it’s also a problem at the state level.”

Pauken has occasionally been a force for good, and he’s occasionally been a force for bad, which nevertheless gives him a higher batting average than either of the two main as-yet-unannounced contenders. What he’s saying here sounds altogether too reasonable to have any traction with the seething masses of the GOP primary electorate. I’m really hard-pressed to imagine a scenario in which he comes out on top of either Perry or Abbott. I have no idea why he thinks he can win – maybe he’s rooting for Perry to step away and Abbott to stay put. Who knows? Anyway, good luck, and watch out for the Pauken-mentum.

It’s drug testing all the way down

Looks like the urinalysis industry in this state is going to get a big stimulus package next year, at least if the Republicans get their way.

As top state leaders push to drug-test some Texans seeking jobless benefits and financial assistance, critics suggest the initiative would single out the powerless and hurt their children.

It’s a battle that has been played out in other states – most prominently in Florida, where a drug-testing program for welfare applicants was stalled by a constitutional challenge saying it amounted to an unreasonable search.

Backers of Texas’ proposal cite its narrow scope, since a leading bill targeting welfare recipients would limit testing to applicants deemed high-risk for drug use. Those who failed the test and lost benefits could reapply in a year or, if they underwent drug treatment, six months.

“The reality is, no one wants to see any Texan using drugs,” said state Rep. Sylvester Turner, D-Houston. But he’s a critic of the proposal, contending the poor and jobless are being singled out “because of politics, and not because of reasonable, rational policy.”

“Whether you are receiving governmental assistance on welfare, whether you are a student receiving a Texas grant, whether you are an executive, a CEO, that’s up here asking for money from the Enterprise Fund – I don’t want to see anybody using drugs inappropriately. Now the question for me is why are we singling out this population?” he asked.

I think we all know the answer to that question. This is a no-brainer for Rick Perry et al – it plays well to the cheap seats, it sounds like something that would save money, and who’s going to stand against them on behalf of drug users? You can’t ask for much more than that.

Maurice Emsellem, policy co-director for the National Employment Law Project, said federal legislation allows testing only for claimants terminated from their most recent employment due to unlawful use of controlled substances, or those for whom suitable work is only available in an occupation that regularly drug tests.

The U.S. Department of Labor is developing regulations to allow states to implement these provisions. It appears the first would be a tough one in Texas, which restricts benefits to those who have lost a job through no fault of their own.

Andy Hogue, spokesman for Texas Workforce Commissioner Tom Pauken, who supports such drug testing, said it’s estimated the cost of testing for jobless applications would be about $12.1 million over five years. He said it’s projected the stricter requirements would save the Unemployment Insurance program in Texas $20.7 million in that period.

I seriously doubt we’ll see the kind of savings that Andy Hogue projects. I admit I have no evidence to back up this assertion, I just have no reason to trust such a self-serving projection. If this gets passed by the Lege and doesn’t get blocked by the courts, I’ll be very interested to see how that projection pans out. Bear in mind, of course, that four million bucks a year is chump change in an $80 billion budget – it’s not much more than Rick Perry spends on travel and security. Again, it’s all about priorities being out of whack.

Pauken on testing

Patricia Kilday Hart has a conversation with Texas Workforce Commission Chair Tom Pauken about testing and accountability in public schools.

Tom Pauken

As a Texas Workforce Commissioner, Pauken has spent a lot of time studying whether our public school system prepares an educated workforce.

His conclusion? The focus on college-prep and testing has, well, “left behind” kids who would be better served earning an industrial certificate that would snag them a good job with a middle-class income.

Right now, “Help Wanted” signs across Texas beg for trained workers in welding, machinist, electrical or commercial trucking fields. But our college-centered school system – measured incessantly by tests – isn’t producing an adequate pool of applicants.

“I don’t think this teaching to the test benefits anyone,” said Pauken. “It is taking away from learning.”

Does every student need to be college ready? “We need multiple pathways to high school education,” he said. One pathway would be getting ready for college; another would be “career-oriented, with an emphasis on an industrial credential.”

Students who aren’t inclined to pursue college simply give up and drop out of school, Pauken says.

“It’s self-defeating. There are blue-collar jobs out there,” said Pauken. And more to come soon: “The average age of a welder is 50. This is a huge opportunity for young people, and it pays well.”

Pauken hopes to persuade the Texas Legislature to make sweeping changes to our education system when it meets in January – beginning with the acknowledgement that some students are not well-served by a strictly college-prep curriculum.

I agree with what Pauken says about the need for more vocational education, a subject he discusses at greater length in this Statesman editorial. I daresay most people would agree with that, and with the idea that there ought to be more than one pathway to educational success. I’ve interviewed a lot of candidates for various offices and asked them questions about public education and college readiness and standardized testing, and I’ve yet to hear one say that we need less vocational education. If Pauken has a strategy to achieve his stated goals then more power to him. I’m wondering what his plan is to overcome accountability absolutists like Bill Hammon and TAB, as they are unlikely to back off their no-retreat-on-testing stance. I wish Hart had explored that in her column, since it is potentially a critical story line for the 2013 Lege, but I suppose we’ll hear plenty about it before all is said and done. EoW has more.

TAB takes a hostage

Can’t say I’m surprised by this tactic.

Leaders in the business community said Wednesday that they would not stand for increased funding for education if it came with any rollback of accountability standards in Texas public schools.

“If we are going to remain competitive in the world’s market, we are going to have to have an educated workforce. We do not have one today,” said Bill Hammond, the president of the Texas Association of Business. “We will vigorously oppose additional money for the public school system unless and until we are certain that the current accountability system is going to be maintained.”

The Capitol news conference, held by the Texas Coalition for a Competitive Workforce, comes as the standardized testing that is the backbone of the state accountability system is facing considerable backlash from parents, educators and lawmakers.

[…]

Wednesday, members of the workforce coalition — which includes groups influential in the Legislature like the Texas Association of Business, Texas Institute for Education Reform, Texas Public Policy Foundation and the Texas Business Leadership Council (formerly the Governor’s Business Council) — made clear they would not support any kind of tweaks to the system that was established by House Bill 3 in 2009. An attempt by outgoing House Public Education chairman Rob Eissler to do just that during the last legislative session failed with the opposition of the business community.

“Before this landmark piece of legislation, HB3, is even fully implemented, we have people who want to roll it back and go back to fight the old wars about teaching to the test and all these other myths that are out there,” said Jim Windham, chairman of Texas Institute for Education Reform.

They argued that the existing system is the only way to ensure taxpayers know their money is being well spent.

“STAAR testing is an excellent step towards ensuring that the state’s education dollars are being directed into the classroom so that college- and workforce-ready students emerge from Texas public schools,” said James Golsan, an education policy analyst for the Texas Public Policy Foundation, a conservative think tank.

To be blunt, these guys are full of it. The TPPF thinks we spend too much on education to begin with, and TAB is about as likely to support any measure that would actually increase revenue for education as Rick Perry is. Saying they’ll oppose an increase in funding for public education unless their demands are met is like Willie Sutton saying he’ll oppose the hiring of more police officers unless those pesky bank robbery laws get repealed.

On a more general note, I don’t understand the single-minded focus on the STAAR tests. Everyone wants accountability, and everyone wants students to graduate having received a good, comprehensive, useful education, but why in the world must we believe that STAAR tests are the only way to achieve that? I agree with this:

Dineen Majcher, an Austin lawyer whose daughter will be a sophomore at Anderson High School next fall, said she was offended by the insinuation that parents are being led around by superintendents.

“We are smart enough to see what that system is and is not doing and we can perfectly understand on our own that it is a badly flawed system that needs to be fixed,” said Majcher, who listened to the news conference at the Texas Capitol.

“I think it is inappropriate to hold public funding hostage to repairing the problems that we all know exist with the current testing system,” said Majcher, who is part of a new parent group called Texans Advocating for Meaningful Student Assessment. “The testing system is badly implemented, badly flawed, there are a lot of groups, a lot of parents who are working very hard to make positive corrections to that. I would not call that rolling it back. I think when we see a mistake, we make a course correction.”

Exactly. We’ve been pushing various accountability measures for 20 years in Texas. Some have worked well, others not so much, but it’s been an ongoing experiment, with tweaks, adjustments, and changes of direction as needed. To believe that the STAAR and only the STAAR can achieve the goals these guys says they want is myopic and suggests they care more about the process than the result. Turns out, even some prominent Republicans see it that way, too.

Texas Workforce Commissioner Tom Pauken said Thursday that the state’s current public education accountability system is “broken and badly in need of fixing.”

During testimony at a hearing of the House Committee on Economic and Small Business Development on career and technology education, the former state GOP chairman expressed his disagreement with a coalition of business leaders and a conservative think tank that announced Wednesday it would oppose any additional funding to public education if there were any rollback of existing accountability standards.

Pauken, who along with two other commissioners oversees the development of the state’s workforce, said he was surprised that the coalition claimed to speak for the business community and conservatives as it defended the existing testing system.

He said he had found widespread agreement among business leaders, teachers, school district officials and community college representatives he had spoken to around the state that “teaching to the test is one of the real reasons that we have a significant skill trade shortage.”

Pauken said he spoke as both a businessman and a conservative when he criticized the position taken by the coalition.

“The current system does not hold schools accountable for successfully educating and preparing students — rather it makes them beholden to performance on a single test,” Pauken said, adding that a consequence of the system was that “‘real learning’ has been replaced by ‘test learning.’”

Hammond and his buddies are speaking in their own interest, not those of schools, students, or parents. We should not take their little tantrum seriously.

Job growth was good last year

More hopeful news for this year.

Jobs and job growth for the region (Source: Greater Houston Parnership)

Boosted by gains in energy, manufacturing and retail trade, the Houston area added 75,800 jobs during 2011, a 3 percent increase over the previous year, the Texas Workforce Commission reported Friday.

“The numbers are impressive,” said Barton Smith, professor emeritus of economics at the University of Houston.

Improvement appeared to begin at the end of the summer and has been broadening over a greater number of sectors.

“The improvement in energy is now spilling over to the rest of the economy,” Smith said.

You may be looking at that 75,800 figure and saying to yourself “Didn’t we just see some better numbers than that for 2011? What gives?” You’re right, we did. The difference is that the numbers reported in that earlier post were for the November 2010 to November 2011 period, while these here are December 2010 to December 2011. What accounts for the difference? Barton Smith suggests the November ’11 numbers were a bit wonky. Here’s another explanation:

Last year the Austin area — and Texas as a whole — showed modest job growth at an annual rate of about 2 percent. Texas added 204,500 jobs last year, while the Austin area added 16,100 jobs over the year .

However, the rate of net job growth was negligible for December and well below the annual rates for Texas and the Austin area.

Alan Miller, executive director of the regional arm for the state workforce commission, said he doubts the survey is capturing Austin’s growth accurately.

“Personally, I think our local economy is growing and adding more jobs than what is reflected,” he said.

For example, he said there have been numerous news reports of software firms expanding or relocating here, but the workforce commission’s report reflects zero job growth in the information sector.

“I can’t explain that,” Miller said.

The data are based on a survey of employers and are updated monthly as well annually. For that reason, the monthly data indicate directions for the economy, but economists tend to favor the annual, corrected numbers.

In other words, it’s also quite likely that the December ’11 numbers are not accurate, and will be significantly revised when the next report comes out in March. So don’t panic.

“If it slowed down, it slowed down from a 100-yard dash to a mile run,” added Patrick Jankowski, vice president of research for the Greater Houston Partnership. “Maybe we’re finding the pace we can sustain over the long run.”

Jankowski also noted that local job growth in 2011 was the sixth strongest of the past 21 years. Houston saw year-over-year growth in all but four sectors: transportation, warehousing and utilities; information (which includes media); arts, entertainment and recreation; and government.

Austin saw government employment shrinkage as well. Unlike some people, I expect more of that this year, though I fervently hope not as much as there was last year. The Trib has more.

How’s that Texas miracle going?

Not so good.

The Texas unemployment rate reached 8.5 percent in August, its highest rate since June of 1987.

That’s an increase from 8.4 percent in July.

Those numbers come from the U.S. Department of Labor. The numbers were confirmed by the Texas Workforce Commission, which says the state lost 1,300 jobs in August. Texas gained 8,100 private-sector jobs, but those jobs were wiped out by job losses in the public sector.

For the year, Texas has added 272,000 jobs in the private sector but lost 19,000 government jobs. In August alone, the state lost 11,500 jobs in local government, for a net loss of 9,400 government jobs.

The Texas unemployment rate ranks 27th, tied with Colorado.

Gov. Rick Perry is trying to make the Texas jobs record the centerpiece of his campaign.

Indeed. Maybe cutting billions of dollars from the budget and laying off thousands of government workers wasn’t the best way to add jobs and grow the economy. I’m just saying. Apparently, the Perry response to this is to blame the President for the loss of local and state government jobs. Funny, I thought Republicans used to call that sort of thing “shrinking government”, and liked taking credit for it. One more thing to add to the list of things they used to support but now oppose, I guess.

On Texas’ government jobs

Since I had previously complained about a lack of acknowledgement by Texas writers about the role that growth in the public sector has played in the so-called “Texas Miracle”, I want to give credit where it is due.

In the Texas that Perry has presided over as governor since December 2000, the job-creation record is more complicated — and more tied to government.

During Perry’s tenure, the combined number of federal, state and local government jobs in Texas has grown by 18.3 percent vs. a 10 percent increase in private-sector jobs.

One of every four jobs created in Texas since Perry became the state’s chief executive is in the government sector, figures from the Texas Workforce Commission show.

Since the U.S. recession officially ended in June 2009, Texas has added almost 297,000 private-sector jobs, a 3.5 percent increase. Government has added about 31,000, a 1.7 percent clip.

“Strong job creation over this period is the result of a thriving private sector and an increase in government workers. … We cannot ignore the fact that the government sector has added as many workers as mining over this time, with the U.S. Department of Defense alone adding nearly 5,000 jobs in Texas through military base consolidation,” said Jason Frederick, senior economist with bank BBVA Compass.

The mining sector includes the energy industry.

There are some helpful charts in the story to illustrate these points; if you do the math, the government sector was responsible for 26.5% of all jobs created during Perry’s tenure, which is slightly more than one in four. I hadn’t even considered the number of military jobs in the equation, since that’s not particularly visible here in Houston. I presume the post-recession figures are net growth, which would take into account all of the layoffs that local and state government have made since then, with more to come as the budget for the next biennium kicks in this week. Don’t expect our highest-since-the-80s unemployment rate to drop much in the near future.

Texas’ unemployment rate spikes

Texas unemployment rate hits its highest mark since 1987. That’s probably not the kind of headline Rick Perry wants to read right now.

As Gov. Rick Perry touts job creation and limited government on the campaign trail, the Texas’ unemployment rate tied a 1987 record in July and the Austin-area took the brunt of the state’s job losses in the public sector.

The Texas Workforce Commission on Friday termed the employment results “mixed” because the state added 29,300 jobs but the seasonally adjusted jobless rate increased from 8.2 percent in June to 8.4 percent last month.

Having the state tie a 24-year high for unemployment rate could be coming at just the wrong time for Perry. Perry has long called Texas a national jobs-creation leader in a country besieged by unemployment. He traveled through Iowa this week on a bus with “get America working again” painted on the side.

The latest unemployment numbers could weaken that message. The rate hasn’t been this high since the mid-1980s oil bust. And even though Texas has received numerous accolades for creating more jobs in recent years than any other state, 26 states had a lower unemployment rate in July.

In other words, Texas’ unemployment rate is slightly worse than the median, and is now only 0.7 points better than the national rate. What a miracle!

There’s more from the Chron and the Trib. I have often complained in this space about how a writer from some national media outlet will do a story about Texas that gets things fundamentally wrong, but so far it’s a non-Texan who has made a critical point about these figures that has been unmentioned by the locals. As Jared Bernstein has pointed out, an awful lot of Texas’ job growth in recent years has come from the govern sector. As quite a few of those jobs were in public education, the stimulus played a large role as well. We are of course now seeing many of these jobs get lost, thanks for the most part to the state’s budget cuts. Growth elsewhere is thankfully enough to offset that, and since many school districts had been prepared for even worse cuts than what they ultimately got, fewer education jobs than originally anticipated will be lost. The point is that Texas’ job picture is much better than it otherwise would have been in the past thanks to government hiring, and it will not be as good as it could be in the future thanks to government firings. You can’t talk about Rick Perry and jobs without talking about that if you want to tell the whole story.

Non-robust job numbers in Texas

As goes the country, so goes the state.

The Houston area is showing signs of a slowdown after coming off some fairly strong job gains during the winter months.

“It’s very consistent with the national pattern,” said Barton Smith, professor emeritus of economics at the University of Houston, who pointed to the data released Friday by the Texas Workforce Commission that showed Houston area employers added just 45,000 jobs during the past 12 months, a gain of 1.8 percent.

Since January, when area employers put on 56,600 jobs, a 2.3 percent gain, they have been easing back on their hiring.

The slowdown is relatively modest, Smith said. But it’s becoming increasingly clear hiring isn’t as robust as it was just a few months ago.

There’s another factor in play as well.

Austin-area employers added 13,700 jobs in the 12 months that ended in May, a 1.8 percent annual gain, the Texas Workforce Commission reported Friday.

But the region’s largest job sector, government — which includes local school districts and higher education — lost 600 jobs, a 0.3 percent decline. That was the first sign of local and state budget cuts that are expected to grow over the summer, as the full impact of teacher and state agency layoffs is felt.

That sector accounts for 22 percent of the 785,300 jobs in Central Texas.

The cutbacks were even deeper in other large Texas cities.

The Dallas area lost 3,200 government jobs last month, a 1.2 percent drop. Houston was down 7,300 jobs, or 1.9 percent, and San Antonio was down 2,400 jobs, or 1.4 percent.

That’s just the tip of the iceberg. Remember, the Legislative Budget Board forecast large numbers of jobs lost as a result of the penurious spending cuts. That was based on the initial House budget, which was a lot harsher than what is now in the pipeline, but it’s still going to result in a lot of layoffs. Maybe as Rick Perry continues his Ego Across America tour, someone in the national media should ask him about that.

The Lege’s job killing budget

Do you think this is what all those people who came out to vote last November had in mind?

The Legislative Budget Board, a nonpartisan state agency that helps lawmakers with budget numbers, predicts that House version of the 2012-2013 state budget would result in 272,000 fewer jobs in Texas the first year and 335,000 fewer in 2013.

The projected loss includes eliminating 117,000 private sector jobs in 2012 and 146,000 in 2013. An amendment to the House rules by Rep. Mike Villarreal, D-San Antonio, directed the LBB, which is overseen by the House speaker, lieutenant governor and other state leaders, to produce the Dynamic Economic Impact Statement.

“The voters did not elect us to eliminate hundreds of thousands of jobs. We have to be smarter than this,” Villareal said. “We can’t grow the Texas economy with a budget that destroys jobs, hurts neighborhood schools and makes college more expensive.”

Villarreal has more here. The report doesn’t say directly that this many jobs will be lost, just that Texas will have this many fewer jobs than it would have under a baseline budget scenario. If you have a basic understanding of economics, there’s nothing surprising about this. Cutting government spending is taking money out of the economy. Firing government workers adds to unemployment. Any other conclusion by the LBB would have been shocking. What I expect to happen, if the Republicans are forced to acknowledge this report, is that they will begin attacking the LBB in much the same way that Congressional Republicans have attacked the CBO when it tells them something they don’t want to hear. So far, it’s mostly just whining, as seen in this Statesman story, but give it time. And pay heed to what this guy says:

The projections do not come as a surprise to Bernard Weinstein, an economist at the Cox School of Business at Southern Methodist University.

Weinstein said he had not examined the analysis but that it appeared to be “a government agency in the state of Texas saying, ‘Before you start slashing right and left, remember there are going to be consequences.'”

Weinstein said it was obvious that proposed budget cuts would have an effect on the state’s job market.

“Jobs creation results from spending by both the private sector and the public sector. So now you have what economists call the negative multiplier,” Weinstein said. “By cutting the budget here and cutting the budget there, there will be at least for some time a negative economic impact on income, employment and tax revenue. By cutting state spending, you are cutting state revenues, because the recipients of that spending will not be paying taxes on that.”

Weinstein said the effect is illustrated by the possibility of thousands of teachers being laid off statewide as part of the budget crunch.

“Where are they going to find employment quickly?” he said. “The answer is: nowhere.”

All I can say is that I’m glad to see some kind of counterweight to the overly optimistic forecasts of job growth in Texas. I think we have tougher times ahead than a lot of people expect. If I’m right about that, who do you suppose will get blamed for it this time? Burka, Postcards, Texas Politics, and the CPPP have more, and see also this article in The Economist for a broader view of Texas’ economic situation.

What about the jobs?

With all of the public sector job cuts coming, will the private sector pick up the slack? This Statesman story paints a picture that I think is a tad bit too optimistic.

Government employment, which includes local school districts and higher education, made up 22 percent of total nonagricultural jobs in the Austin area in 2010, according to the Texas Workforce Commission.

In the past five years, government employment has grown by 14 percent, helping offset losses in other areas such as manufacturing, which fell by 17 percent in the same period.

As the state capital, Austin has always had “this terrific stabilizing factor” of public sector employment, said Jon Hockenyos, president of TXP Inc., a consulting firm specializing in economic analysis and public policy.

But Texas’ projected state revenue shortfall of as much as $23 billion means deep cuts in public sector jobs.

Local school districts already are preparing to cut positions, including more than 1,000 in the Austin district, hundreds more in Round Rock and more than 140 in the Georgetown district.

The Texas Education Agency already has eliminated more than 100 jobs, and other agencies also have trimmed positions.

The University of Texas, one of the region’s largest employers, also has cut jobs.

Those losses mean that private-sector employers will have to pick up the slack to keep the area’s economy going.

It’s a tall order: Central Texas had 770,500 jobs in 2010, 1.5 percent more than in 2009. But the region still is short of its peak of 775,800 jobs in 2008.

And the unemployment rate hovered around 7 percent all of last year.

Last year, preliminary estimates from the Texas Workforce Commission indicated a higher job growth rate. The revised figures — part of the commission’s annual process, using more specific data — surprised some economists but didn’t alter their overall assessment of the Austin economy.

The story is filled with mostly anecdotal evidence of growth in small businesses. Which I’m sure is happening, and which I hope is going to exceed everyone’s expectations. But this story focuses exclusively on the Central Texas region, which will have a lot more of those opportunities than, say, rural areas, where job losses in school districts are unlikely to be offset. It also doesn’t take into account losses in county and municipal employment, which will surely add a lot more to the total. It’s for all those reasons that I thought the initial projections of job growth by the TWC were too blue-sky. I’d love to be wrong about this, but I’m still feeling pretty bearish overall.

You got a license for that downward dog?

How much regulation do yoga teachers need?

In the past few years, the Texas Workforce Commission has begun sending letters to programs that train yoga instructors, advising them they must get certified to operate as a career school or college, or request an exemption. Career schools and colleges are regulated under the state’s education code.

Certification costs $1,000 to $3,000, and schools that don’t comply can be closed or penalized $1,000 a day. Exemptions are allowed for training programs that cost less than $500, last fewer than 24 hours or are designed to teach recreational or avocational subjects.

The amount of training required to become a yoga teacher varies, but the Yoga Alliance , a national education and support organization, has 200-hour or 500-hour standards for teachers. Training generally costs at least $3,000.

Jennifer Buergermeister, who owns two yoga studios in Houston and is founder and executive director of the nonprofit Texas Yoga Association , lobbied state Rep. Jim Murphy, R-Houston, to introduce a bill that would exclude from regulation yoga teacher training programs because they don’t meet the state’s definition of a career school or college — institutions that offer postsecondary instruction that leads to a professional academic career or vocational degree.

That change in language through House Bills 1839 and 2167 , now in committee, would exclude schools that train instructors of yoga, Pilates, karate and other recreational activities from the definition if they do not lead to an educational credential.

[…]

Murphy said his bill is more about limited government than yoga specifically. Training programs that don’t require a high school degree or lead to certification shouldn’t be regulated by the state, he said.

“If you’re going to be a barber, I want those schools licensed or inspected. But if you’re just doing something for gardeners about how to grow vegetables, you don’t need to be regulated. It’s a hobby versus a career,” he said. “At the end of the day, I don’t think (regulation) produces any better of a product.”

Here are HB1839 and HB2167. I disagree with Rep. Murphy’s last sentence, but I do agree with the general sentiment about regulating careers versus hobbies. And I’d actually go a little farther than Rep. Murphy and suggest that some of the licensing requirements we have for certain careers serve not as guardians of public safety but as barriers to entry, and they ought to be reviewed for efficiency and effectiveness. Licensing overreach is a topic that Matthew Yglesias often writes about, and I think he makes some good points. I’d call these bills a step in the right direction.

Happy talk about Texas employment

2010 was a better year for employment in Texas than 2009 was.

Texas employers expanded payrolls by 20,000 jobs in December, the third straight month the state has gained jobs, according to data released Friday by the Texas Workforce Commission.

The state gained in most major employment sectors, led by construction, with 8,700 jobs.

“It’s a very positive picture on job growth,” said Mine Yucel, an economist with the Federal Reserve Bank of Dallas.

The state unemployment rate edged up to 8.3 percent from 8.2 percent in November and 8.1 percent in October. But even that may be a sign of recovery, Yucel said.

To be counted as unemployed, a person without a job must be seeking work. As employers add jobs, some people who had given up looking for work are apt to start trying to find a job again.

“It means people are seeing more jobs out there, and they’re coming back into the labor market,” Yucel said, referring to the rise in the unemployment rate. “As the economy grows, we expect that rate to come down.”

[…]

During 2010 as a whole, Texas payrolls expanded by 230,800 jobs after shrinking by more than 350,000 in 2009.

[…]

“The monthly growth was strong in December, and the year-over-year growth is representative of a solid overall recovery in the Texas job market,” said Waco economist Ray Perryman.

That’s good, and I’m delighted for everyone who found a job this past year. But I wonder, is all this optimism truly warranted at a time when the Legislature is working on a budget outline that might result in 100,000 teacher layoffs, which would be on top of county and city layoffs? Sure, maybe these things won’t happen – maybe the Lege will come to its senses and use the Rainy Day Fund to blunt some of the impact of the shortfall, thus limiting teacher firings to the 10,000 range or so – but how can you not even discuss the possibility when assessing the outlook for 2011? That just doesn’t seem right to me

How to really put the unemployed to work

Texas Workforce Commissioner Tom Pauken has the germ of a good idea here. Unfortunately, he’s incapable of seeing what it is, and so goes off a cliff with it.

“Even in good economic times, there were people in Texas who saw the unemployment system as simply another entitlement program, which it’s not,” Pauken, who served in the Reagan administration, told me. “Obviously there are a tremendous number of people — they’ve lost their job through no fault of their own. They’re doing everything they can to try to find work. How do you distinguish between those who are really out trying to find work and those who simply want to draw an unemployment check as long as they can?”

Pauken suggests setting a wage of, say, $10 an hour and having people who get extended federal benefits work enough hours to cover their unemployment payment — “rather than it continue to be a drain on the taxpayer dollars.”

The appointee of GOP Gov.Rick Perry said this would weed out people “who may be gaming the system,” provide a worthwhile task for those trying their best and possibly open job opportunities.

[…]

Pauken “has it all wrong — hard-working Texans should not be required to take a low-paying job that has no relationship to their skills and background using their limited unemployment benefits to subsidize their wages,” saidMaurice Emsellem of the National Employment Law Project. “Unemployment benefits were created as an insurance program to help people get back on their feet, not to add insult to injury by blaming workers and their families for the devastating economic mess we’re in thanks to Wall Street.”

The Texas AFL-CIO’sRick Levy called the idea “a perversion of the unemployment system … Really what he’s proposing is a public jobs program, but instead of paying people a living wage, we would make them work for their unemployment benefits.

“In many ways, it’s an insult to working families that are doing everything they can to scrape by right now,” Levy said. “Basically, it would be putting people to work but eliminating things like minimum-wage and safety and health protections that only attach if you’re part of the workforce.”

To address Pauken’s points, there are people who believe that fluoridation of the water supply is a Communist plot to brainwash the American public. We’re not required to take that viewpoint seriously, and we’re under no compunction to do the same with those who think that unemployment insurance is a scam for lazy people, either. I’m sure there are a few folks gaming the system out there, working hard to get a meager one-third of their former salary instead of finding a job that might pay a real wage, just as there are those who commit other kinds of fraud. The marginal benefit we’d likely get from trying to root them out in this fashion is minimal, especially when weighed against the indignity and inconvenience of those who are working diligently to find employment while receiving this insurance. Putting the insult aside, what’s the point? Pauken doesn’t even suggest a pulled-from-his-ear figure of how much his silly idea might save if it were to be implemented, which is a sure sign of its half-baked-ness.

Having said that, I’m all in favor of a program to get unemployed people back to work, which we clearly need. It’s called another federal stimulus package, this one containing enough money for cities and states to eliminate the many large anti-stimulus packages that have greatly harmed the economic recovery. There’s still a gazillion infrastructure projects that can and should go forward, not to mention a lot of beach cleanup – I like the idea of making BP put up a couple billion dollars to pay for workers to clean the beaches – and of course we’ll need a lot of job skills retraining for folks who’ve been unemployed long term. That’d do the trick a lot more effectively than what Pauken proposes, and it would be a long-term winner for the federal deficit as well as all those underfunded states. You want people working, Tom, there’s your answer.

(A little bit of) job growth returns to Houston

It’s a start.

From small hand-lettered signs on shop windows to Fortune 500 heavyweights hosting job fairs, Houston companies are once again starting to look for workers.

The influx of new jobs helped push the Houston area’s unemployment rate down slightly to 8.4 percent in April, according to the Texas Workforce Commission. The local jobless rate, which is not adjusted for seasonal variations, was 8.5  percent in March.

The commission also reported that Houston-area employers added 2,700 new jobs during April.

“It continues to look like we’re plowing ahead with steady, moderate growth,” said Barton Smith, director of the University of Houston’s Institute for Regional Forecasting.

Since Houston hit bottom in September, the area has been adding about 1,900 jobs a month, said Smith, who seasonally adjusts the monthly Texas Workforce Commission data. If that pace continues, Houston would be on track to add about 23,000 jobs over the course of a year, an increase slightly under 1 percent.

That’s not a lot for Houston, which is used to much more robust job creation, Smith said.

“But at least it’s growth,” he said. And it seems to be accelerating, he added.

There’s some context missing here. What do “robust job creation” numbers for Houston look like? How many jobs per month need to be created just to keep up with population growth? It would be nice to know these things, but they are not in the story. It’s also the case that new unemployment filings were up a bit – as Dr. Smith notes, there’s some churn as certain sectors seek to add employees while others are still shedding payroll. But at least the graph is pointing up again, and that’s something. If we can get something similar from property values, next year will be a lot better, or at least a lot less bad, than this year was. Keep your fingers crossed.

Just a reminder about Perry’s unemployment tax increase

Lisa Falkenberg watches some video of Texas Workforce Commission Executive Director Larry Temple testifying before the Senate and reiterates something we knew.

Temple acknowledged Thursday to the Senate Committee on Economic Development that Texas’ decision not to take $556 million in unemployment stimulus dollars directly led to higher taxes for business owners and more borrowing from the federal government to replenish the state’s broke unemployment trust fund.

As you’ll recall, Gov. Rick Perry refused to accept a half a billion in federal unemployment stimulus dollars, saying there were too many strings attached, even though he knew the state’s unemployment fund was projected to go broke within months.

Temple testified Thursday that the commission has had to double the tax rate for businesses in order to replenish the unemployment fund. And he conceded under intense questioning from [State Sen. Kevin] Eltife that the hike wouldn’t have been as high if we’d taken the half a billion.

Earlier this week, Commission Chairman Tom Pauken notified lawmakers that the agency may have to issue $2 billion in bonds to feed the unemployment fund as time runs out on the state’s no-interest borrowing from the feds.

And for some businesses, the tax rate nearly tripled. You really need to see the video to get the full effect of Sen. Eltife’s questioning. Eye on Williamson has the key five-minute clip, which I’ve embedded here:

Sen. Eltife did his best to steer away from the politics of this, but we all know whose idea it was to turn down the unemployment insurance money. Rick Perry’s decision to do so was harmful to people who had lost their jobs and is now adversely affecting business owners. We knew this would happen, but he didn’t care.

Unemployment taxes triple

Here comes the Rick Perry unemployment tax increase that we’ve been waiting for.

Nearly two-thirds of Texas businesses will see the unemployment taxes they pay per employee per year nearly triple – from $23.40 to $64.80 – under rates announced today by the Texas Workforce Commission.

The minimum tax is paid by nearly 255,000 employers, or 67 percent of those who have been in business for at least a year, according to the commission.

[…]

The tax rate is being increased to repay federal loans and ensure the fund has enough money to pay claims in the coming year.

The rate is based on $9,000 in taxable wages. The minimum rate is going from 0.26 percent to 0.72 percent.

The maximum rate — generally paid by companies if they have had more employees who were laid off and got benefits — is going from 6.26 percent to 8.6 percent, or from $563.40 per employee to $774.

Schweet. Just remember, while the bulk of the fuss over this will be concerning the $555 million in unemployment insurance that Perry refused, he also contributed to this problem by suspending the collection of this tax back when it was more affordable for businesses to pay it. Because of that, they get the increased burden now when times are hard. Of course, that’s the way Bill Hammond of the TAB says they say they like it, which should stand as evidence why business lobbyists make lousy economists. Be that as it may, if you’re an employer, when you sit down to write that bigger check to the state, remember to thank Governor Perry for the privilege of paying it.

Here comes the unemployment tax increase

Here comes that unemployment insurance tax hike we’ve all been waiting for.

Under state law, the state’s unemployment trust fund is supposed to stand at 1 percent of taxable wages, or about $860 million. The fund has been depleted in the wake of high jobless claims.

As a result, employers will have to pay more to restore the fund to its mandated level, although the commission tried to cushion the blow by spreading the deficit assessment over several years.

Unemployment tax collections still are estimated to rise to $2.3 billion next year; $2.68 billion in 2011; $2.72 billion in 2012, according to commission spokeswoman Ann Hatchitt. Specific rates for employers were not available Tuesday. How much each employer pays varies, largely based on claims against an employer’s account.

Given the speculation that the Commission was going to push the pain as far back as it could, which is to say after the 2010 elections, I commend them for being realistic about the hole we’re in. The story notes for the umpteenth time the unemployment insurance stimulus funds which Governor Perry refused to take and which surely would have made that hole a lot less deep, not to mention the pain of unemployment a lot less stinging for many Texans, but it wasn’t the only thing he did to exacerbate this situation. His suspension of the tax back when times were good but the ditch was visible on the horizon still ranks as one of the dumbest things he’s done as Governor, and that’s not a short list.

“We haven’t been good squirrels. We haven’t put away nuts for the wintertime,” [Texas AFL-CIO Legal Director Rick] Levy said. “In fact, we deplete our fund so that when wintertime comes, not only is there not anything there, but we have to start charging extra. It’s just a backwards way of doing it.”

[Bill Hammond, president of the Texas Association of Business, and] a past chairman of the commission, disagreed. “It’s my view, and the view of the employers, that it’s better to collect as little tax as needed,” Hammond said.

“Stockpiling the money in Austin, Texas is not a good strategy. We’d rather have the money out and working, creating jobs during the good times.”

Well, if that’s really what you want, then this is what you’ll get in the bad times. Hope you appreciate it.

Playing politics: Not just for the Forensic Science commission

Hey, you know that two billion dollars of federal funds we need to borrow to shore up the unemployment insurance trust fund? I’m sure you’ll be shocked to hear that Rick Perry’s appointees on the Texas Workforce Commission are thinking about delaying the inevitable tax hike to pay for all that until after the 2010 elections.

A plan to delay the worst of tax increases until 2012 is circulating at the Texas Workforce Commission, which is expected to set next year’s rates on Nov. 3.

Commissioners face an unappealing choice: Hammer businesses next year or spread the pain out over several years. Some experts say that while it’s understandable the commission would want to defer pain as long as possible, a blow that comes just as the recession wanes could crimp job creation in the state.

“It’s a big gamble in many ways,” said Don E. Baylor Jr., senior policy analyst at the Center for Public Policy Priorities, which advocates for low- and middle-income Texans. “We’re basically saying, ‘Hey, we’ll get out of this the same way we got out of it the last time, which was just gangbuster economic growth.’ And I don’t think anyone’s forecasting that.”

Bill Hammond, president of the Texas Association of Business, the state’s largest business organization, also expressed caution.

If commissioners try to postpone heavy tax increases for two or more years, “they might be overdoing it a little bit,” said Hammond, a former Dallas state representative who was the commission’s chairman under Gov. George W. Bush.

“Employers know that we’ve got to pay the piper” after a severe recession, he said.

When even Bill Hammond says that putting off a tax increase might not be such a hot idea, you know it’s a really risky idea.

No decision has been made, but commissioners could suspend for two years an assessment that makes up for shortfalls in the fund, which has been tapped out and living on federal loans since July.

They’d also issue $2 billion in bonds at the end of next year, to pay off the feds before any interest kicks in, triggering bond repayment taxes that could last until 2019.

Even with the extended delay of taxes, most employers would pay about 50 percent more next year than this year, according to a Dallas Morning News analysis of historical tax yields and recent commission documents. This year, nearly 75 percent of Texas businesses paid $23.40 per worker into the fund.

If the commissioners don’t issue the bonds and don’t suspend a “deficit assessment,” then employers probably would be squeezed harder next year than they have been in 21 years. The tax paid by most employers could go up fourfold, and maybe even more than that, the newspaper’s analysis indicates.

[…]

Earlier this year, Perry and lawmakers rejected $556 million in federal stimulus money that would have eased the state fund’s shortfall. Perry said the money would have come with too many strings attached, such as liberalized treatment of people quitting their job to follow a spouse to a new location or unemployed workers seeking only part-time work.

Last year, Perry pushed the three workforce commissioners, who are his appointees, to suspend collection of part of the tax, saving employers $90 million. He also trumpeted $148 million of refunds to employers, required by law when the fund balance passes $1.7 billion.

This year, just over $1 billion was collected from employers, while the state’s on track to pay out some $3.5 billion.

Just so we’re all clear on who we can thank for this.

Always go to the source

If you find yourself in the position of needing to file for unemployment insurance from the state of Texas, be sure you go to the Texas Workforce Commission page to do it. Do not go anywhere else.

As if it’s not bad enough to lose a job, some people trying to apply for unemployment benefits with the state have instead mistakenly filed their personal information with privately run Web sites.

“What you’ve got is a private site that may be legal but is trying to get information from people so they can sell those lists to others for possible financial gain,” said Texas Workforce Commission Chairman Tom Pauken. “They are just taking advantage of the situation. There’s always somebody trying to figure out an angle.”

The state commission isn’t alleging any laws have been broken, he said, but people may be confused by official-looking private sites if they aren’t familiar with the system.

Just this week, the three-member commission decided to allow a woman to backdate her jobless claim after she initially provided information to a site called www.The UnemploymentAdvisor.com, and began an e-mail correspondence with it.

[…]

The Unemployment Advisor doesn’t appear to charge a fee to those who provide information; instead it offers advice on maximizing the chance of getting claims approved to those who provide their information.

The state agency said some businesses may try to charge a fee to file claims. Filing for benefits through the Texas Workforce Commission is free.

It’s not really clear what that site might be doing, since presumably it has a profit motive in mind. I suppose this woman and anyone like her will start to receive a lot of unwanted mail now.

Besides warning jobless Texans to be sure they file in the right place, Pauken said the commission is looking into contacting Google to see whether the search engine can help make sure this type of site “doesn’t bubble up to the top” in searches.

In a Web search Wednesday for “unemployment benefits,” www.TheUnemployment Advisor.com was the second site to pop up.

The first was for another private company.

The good news is that a Google search for unemployment benefits Texas, the TWC page came up first. When I searched simply for unemployment benefits, sites for other states filled the first result page, but atop them was a sponsored link to a private company that claimed to represent Texas and exhorted me to “Submit an Application online today. Visit our site. Get your benefits!” Be careful where you click, that’s all I can say.

You can pay me now, or you can pay me later

Odds are, we’ll opt for later to deal with the large deficit we’re facing with the unemployment insurance trust fund.

Texas’ jobless-benefits fund is empty, and the state will probably borrow $1.5 billion from the federal government to pay benefits through December, a state official said Tuesday.

But it’s unclear when Texas employers will have to pay a much higher tax to repay the loan and rebuild a required $863 million cushion in the unemployment compensation trust fund.

A second Texas Workforce Commission official and an outside expert said the brunt of expected higher taxes might not sock employers until 2011, after the worst of the recession passes and well past the March primary for Gov. Rick Perry.

A key driver of higher tax bills for employers – though not the only one – in the next few years will be a “deficit assessment” to restore the fund to fiscal health.

“The commission can use its discretion in minimizing the tax impact to Texas employers,” said Workforce Commission spokeswoman Ann Hatchitt.

[…]

Hatchitt said some time this fall, the state will decide whether to postpone a deficit assessment until 2011. Commissioners will probably decide at the same time their schedule for issuing bonds, possibly next year, she said. Bond proceeds — a figure of $2 billion has been widely mentioned — would repay funds Texas is borrowing from the federal government.

At Tuesday’s monthly meeting of the three-member commission, chairman Tom Pauken of Dallas pressed the agency’s chief financial officer, Randy Townsend, for an estimate of how much the state will borrow from the feds by Dec. 31. Townsend indicated it would be about $1.5 billion.

Texas won’t have to pay interest on the federal loans until January 2011.

Don Baylor Jr., an employment policy expert, said that if the commission postpones a deficit assessment until 2011, that will force more borrowing from the federal government next year, just to pay ongoing benefits to laid-off workers.

And in 2011, employers would pay not only a deficit assessment but also the first installment of a “bond obligation assessment” lasting several years, said Baylor, who works for the Center for Public Policy Priorities, which advocates for low- and middle-income Texans.

It is reasonable to defer the cost of refilling the trust fund until after the economy recovers, which means that Governor Perry better hope that President Obama’s plans to get things back on track succeed. Of course, if Perry hadn’t so foolishly suspended collection of the replenishment tax back when times were still good, we’d be in less of a pickle now. And the longer we defer the pain, the more we’ll have to borrow in the interim, and the more we’ll have to pay back in the future. The next biennium’s budget is under enough stress already, and this will just add to that. But at least we’ll get to deal with it after the GOP gubernatorial primary. That’s what really matters, after all.

Two billion dollars

Governor Perry’s grandstanding rejection of the federal stimulus money for unemployment insurance is going to cost us all more and more.

Texas is preparing to borrow as much as $2-billion to pay for unemployment insurance benefits. That’s what the chairman for the Texas Workforce Commission told KERA in a recent interview. KERA’s Shelley Kofler reports employers who fund benefits can expect a tax increase, too.

The fund that pays unemployment benefits to Texans ran out of money this month. That forced the state to take out the first of several no-interest, federal loans that will total some $643 million- just to pay benefits through September. Then what? Workforce Commission Chairman Tom Pauken says the state will borrow more. A lot more.

Pauken: We are looking at putting a bond in place probably next year in excess of a billion and we could look at a bond in the range of a billion and a half or $2 billion.

Kofler: The state of Texas may have to borrow $2 billion?

Pauken: Yeah, that could well be the case in terms of a bond over a seven-to-10 year period.

Pauken wants to stretch the repayment of $2 billion plus interest over at least seven years saying that might limit a huge spike in the tax rate employers pay to support the benefits fund. But for employers, Pauken says there’s no escape.

Pauken: Oh, they are going to have to pay more next year. They have had lower rates in recent years because the economy has been so good in Texas, but it is going to go higher next year.

Remember, business owners, you will have Governor Perry to thank for this. Now even if we had accepted the stimulus money for unemployment insurance, we’d still be short of what we need to handle the increase in claims. Of course, a big part of the reason for that was because the Texas Workforce Commission stopped collecting the replenishment tax for the unemployment insurance trust fund, which is now broke, back when times were better, because of course the good times always last forever. That was done at the behest of Governor Perry, as Sen. Watson helpfully reminds us. So pretty much every decision Perry has made regarding unemployment insurance has wound up costing businesses money. He’s claiming we may not have to borrow quite as much as $2 billion, but given his track record so far, why should anyone believe him? More here.

Watson on unemployment

State Sen. Kirk Watson reviews the bidding on how the state of Texas has handled its unemployment issues.

As was noted during this past legislative session by Workforce Commission Chairman Tom Pauken (who was appointed by the Governor and once led the Texas Republican Party), unemployment assistance is not a welfare program. It exists to provide temporary help to Texans in tough, sometimes tragic, situations so they can find work without losing their homes, cars, or electricity. And it protects the economy as much as the people who need it.

The commission’s job is to figure out how much money the state needs for unemployment benefits, what to charge businesses that support the program, and how to prepare for things like economic recessions that send the state’s unemployment rate skyrocketing.

And as you may have noticed over the last few days, the commission isn’t doing any of those things very well.

He then provides a nice itemized list of the ways that the TWC and Governor Perry have screwed up or fallen short in this. The TWC has now taken emergency action to avoid needlessly cutting off some 15,000 people’s unemployment insurance. And hey, lookie here, some actual campaign-related activity from Camp KBH:

Rising unemployment in Texas has become an escalating issue in Perry’s re-election campaign. He says his policies have created jobs and helped insulate the state from the worst of the national recession, but on Monday, U.S. Sen. Kay Bailey Hutchison’s campaign called those assertions “political spin.”

“Maybe with all of the double talk coming out of the governor’s office, they haven’t had time to notice that our state has lost 266,300 jobs over the past year,” Hutchison spokesman Hans Klingler said.

Klingler used to be a spokesperson for the state GOP, so he knows his doubletalk. Hitting Perry on job losses is about as good a strategy as any I could think of. The question is in what way will you actually be different than him as Governor. Needless to say, I think Watson would make for a much sharper contrast than KBH would, assuming she ever gets around to trying.

More unemployed, fewer benefits

Boy, no one could have predicted this.

In a sign of lingering hardship, more than 15,000 Texans will lose their unemployment checks at the end of the month because they have exhausted their benefits after 59 weeks without a job.

They are among 82,000 Texans who are on their last allotment of unemployment benefits. Though they are eligible for a further extension funded by the federal government, it could take weeks or months to receive.

Texas Workforce Commission Chairman Tom Pauken has said people are staying unemployed longer as a woeful economy continues to affect people across the state.

During the week of July 4 this year, there were 22,115 initial claims, compared with 12,541 in the same time period a year earlier. Continued claims for that week totaled 298,821, up from 113,489 in the same time period in 2008.

Advocates for labor and for people with lower incomes are frustrated.

“People are literally in the lurch right now,” said Don Baylor of the Center for Public Policy Priorities, which advocates for services for lower-income people. Baylor said he’s heard it could be well into the fall before the extra federal extension kicks in, adding, “That’s going to be really, really difficult for thousands of Texans who are losing their benefits.”

Some of these folks are going to lose their houses as a result of this, which needless to say isn’t going to make the overall economic picture any better.

[Texas Workforce Commission spokeswoman Ann] Hatchitt said Tuesday the state will need to borrow about $643 million from the federal government through Oct. 1, an increase of $150 million from the $493 million projected just last month.

Despite the tough times, Gov. Rick Perry on Tuesday stood by his decision to oppose the state getting another $555 million in federal stimulus money that was contingent on it changing its jobless benefits to allow more people to qualify for payments.

Perry’s “principled” stand is going to cost the state and its businesses a lot of money, and that’s before we take into account the extra helpings of misery that the folks who could have benefited from the expansion of the program will endure. I don’t know what else there is to say that hasn’t already been said.

Well, okay there is one more thing.

Despite the loan, Gov. Perry defended his decision to those who questioned it.

“They are shortsighted and probably criticizing for a political reason rather than a legitimate financial reason,” Gov. Perry said.

Sure, because there was ABSOLUTELY NOTHING POLITICAL about the rejection of the unemployment stimulus funds in the first place. Why can’t Governor Perry’s critics understand that? He was just operating in Texas’ best interests, politics be damned!

From the “Things are tough all over” department

Texas trying to keep up with unemployment claims.

The rising number of jobless Texans has generated more claims than the Texas Workforce Commission can handle.

The commission has added hundreds of workers and phone lines to call centers to deal with soaring unemployment claims, but officials acknowledge that they can’t answer every call.

A commission spokeswoman, Ann Hatchitt, told the Fort Worth Star-Telegram they were hiring and training folks as fast as they can.
Claimants are urged to file for claims on the commission’s Web site, http://www.twc.state.tx.us, which also has answers to commonly asked questions.

The percentage of claims filed online has risen from about 30 to 50.

The state’s unemployment rate jumped to 7.1 percent in May, from a revised 6.6 percent in April.

And yet somehow, a majority of Texans approve of Governor Perry’s shortsighted decision to reject stimulus funds for unemployment insurance, according to the Texas Lyceum. I don’t know if that’s good messaging on his part or just bad math skills on everyone else’s, but you have to admire his ability to frame the conversation. Which is about the only admirable thing about him that comes to my mind right now.

Unemployment insurance taxes set to rise

Good news, business owners! You’re going to see a tax increase soon.

Most Texas employers should plan for their unemployment insurance taxes to increase significantly next year, Texas Workforce Commission Chairman Tom Pauken of Dallas said Tuesday.

While tax rates won’t be set until December, Pauken said that mounting layoffs are close to exhausting a state trust fund, forcing him and two fellow commissioners recently to authorize what they expect to be $2 billion of interest-free borrowing from the federal government.

[…]

Pauken’s projections came nearly three months after Gov. Rick Perry, with the backing of many business groups, rejected $556 million in federal stimulus money for unemployed Texans. He said President Barack Obama and the Democratic Congress attached too many strings to the money and that Texas would have had to expand eligibility for benefits.

Pauken said that though things could still change, it’s probable that the commission next year will need to raise an amount from employers comparable to the amount raised in 2003 – or 2.4 percent of all taxable wages.

In 2003, the “minimum tax” paid by nearly 278,000 employers was 0.67 percent of the first $9,000 of an employee’s wages, or $60.30 per worker. This year’s minimum tax rate is only 0.26 percent, or $23.40 a head.

For all 448,000 employers, the average tax rate in 2003 was 1.67 percent, compared with 0.99 percent this year. If next year’s rates mirror those from six years ago, the average employer would pay about $150 per employee, up from just under $90 this year.

If the commission doesn’t issue bonds to defer the pain into future years, he said, the commission next year would have to slap an even bigger “deficit tax” on employers.

Under that scenario, Pauken said, the commission would have to squeeze from employers an amount approaching 2.9 percent of all taxable wages – a level not seen in the last decade or so.

And just remember, you have Rick Perry to thank for all of this. A statement from Rep. Garnet Coleman about this is beneath the fold.

(more…)

Oh by the way, the unemployment trust fund is going broke

Floor Pass has the bad news.

The Texas Workforce Commission released its latest projection for the unemployment insurance trust fund balance, and the news is even worse than last month’s.

TWC estimates the fund’s balance will have plummeted to just $19 million by October 1 – that’s $840 million below the trust fund’s legal minimum balance of $858. Last month, the TWC projected an $813 million deficit.

[…]

This is the third consecutive month where TWC has projected the fund to be worse off than the previous month’s estimate. High numbers of layoffs have meant the fund is paying out much more in benefits than usual. To put it in perspective, in the last week of March 2008 TWC paid 95,000 claims to the tune of $27 million in benefits. In the last week of March 2009, the fund paid 250,000 claims and $74 million in benefits – that’s about a 275 percent increase in benefits payouts from the previous year.

TWC’s 2009 Trust Fund Projections

January projection: $447 million below the floor
February projection: $750 million below the floor
March projection: $813 million below the floor
April projection: $840 million below the floor

At this rate, unemployed Texans will have to start paying the state instead of vice versa. Tell me again why some people think we shouldn’t take the federal stimulus money for unemployment insurance? And seriously, Arthur Laffer? For real? I can’t think of a better argument for taking the stimulus money than the fact that Laffer and Talmadge Heflin say we shouldn’t do it. Take it away, Ed:

Ed Sills, spokesman for the state AFL-CIO, urged the state to take the federal unemployment benefits money so it can soften next year’s employer tax increase and help more jobless Texans.

Noting that Laffer in 2006 predicted there wouldn’t be a recession, Sills said, “Citing Laffer for advice on how to run the Texas economy is like relying on candy manufacturers to set dental policy.”

Yeah. EoW has more.

Lege versus Gov on unemployment funds

Showdown time.

The House committee charged with recommending how to use the federal stimulus money does not see eye to eye with Gov. Rick Perry on the $555 million for unemployment insurance.

In a 5 to 1 vote, the committee on Thursday endorsed enacting the necessary changes to state law so that Texas would be eligible for the money. Earlier today, Perry said Texas should not take the money.

House Appropriations Chairman Jim Pitts was the only Republican among the “ayes.” Rep. Myra Crownover, R-Denton, voted against the measure and argued that action should be delayed.

[…]

Also, Pitts plans to join Rep. Tan Parker, R-Flower Mound, as a co-author of a bill that would enact the required legislative changes but allow the extended benefits to expire when the federal money is gone. Estimates indicate the federal money would cover seven years of the additional benefits.

Crownover objected to the vote being today – she says two other members of the committee were in the building but didn’t think any action was being taken. Be that as it may, she hasn’t said she’d reject the funds. And as Phil notes, Texas Workforce Commission Chair Tom Pauken will be working with Reps. Pitts and Parker to craft that legislation. It’s entirely possible to me that the Lege will vote to bypass Governor Perry. Whether they can do it in time to make a veto override attempt is another story. But the stage is set for a rebuke. This will be fun to watch.

Economist Ray Perryman, testifying before the committee, said taking the money is on balance a good deal for Texas. The federal infusion would lessen a tax increase on employers now and would cover the extended benefit for at least seven years.

He added that the unemployment tax does not affect Texas’ ability to compete for jobs. Property taxes and the business tax are much bigger considerations when businesses choose where to set down roots, Perryman said.

Perry is of course simply playing to a small audience – he has a primary to win, after all, and it must be noted that he’s got KBH on her heels right now. The kind of person Rick Perry is trying to please by taking this action is in fact pleased by it. Who cares what the rest of us think?

Here’s a copy of official motion (PDF), which lays out the case for accepting the funds, and a copy of a statement from Rep. Garnet Coleman (PDF), which notes that Texas is already mostly in compliance with the federal law for the funds. EoW, Vince and Vince again, Eileen, McBlogger, and the CPPP have more; I also have a couple of press releases, from Rep. Coleman and State Sen. Leticia Van de Putte. By the way, did you know that 32 million people are on food stamps, and one in 11 of them is in Texas? Or that Texas’ unemployment rate is now 6.4% and climbing? Just FYI. Maybe someone should inform the Governor.

UPDATE: More from Texas Impact.

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Once more with the stimulus and unemployment insurance

By the way, the money that the state has in reserve for unemployment insurance is rapidly being depleted. Just so you know.

[Tuesday], the Texas Workforce Commission announced that the unemployment trust fund is now expected to be almost depleted by October. The commission issues monthly projections and each has been gloomier than the last. By law, the trust fund must stay above $858 million at the beginning of the fiscal year in October. At the current rate, the fund will be $812 million below the floor, commission executive director Larry Temple told the House special stimulus committee yesterday.

And a $812 million deficit means somebody’s gotta pay – and that somebody, according to Temple, will be Texas employers.

Temple said the fund can raise money to pay unemployment benefits in three ways: 1) By borrowing from the feds (and paying interest on the loans) 2) By issuing bonds (also involves paying interest) and 3) By raising taxes on employers. He said the commission’s strategy would probably involve a combination of the three.

However, combo or no combo, even if TWC borrows from the feds or floats bonds, the employers will be the ones funding the debt.

Dunnam made this clear when he asked Temple, “Do any of [the scenarios] involve anyone other than employers paying for the deficit?”

Temple responded, “No.”

Here’s where the stimulus comes in: Don Baylor, a senior policy analyst at the Center for Public Policy Priorities, said if Texas changes its eligibility statute and accepts the stimulus funds, employers will still have to pay an additional $294 million in 2010 to make up for the deficit. But without the federal funds, employers will pay an additional $935 million to make up for the deficit in 2010.

Sure does sound like taking all of the federal stimulus money available for unemployment insurance would be a good deal all around, doesn’t it? It eases the tax burden on businesses, it helps many more people, and by helping more people it has a stimulative effect on the economy. Which was the point, after all. You’d have to be a blinkered partisan zealot not to see the benefits. You know, like Bill Hammond, the president of the Texas Association of Business:

[Hammond] presented a bold proposal to “save” $630 million a year in unemployment benefits payouts, which included measures such as greatly restricting or eliminating benefits for people who receive severance pay. He also said the commission didn’t do enough to ensure people are looking for work while they’re receiving benefits: “The commission is allowing [unemployed] people to sit on their laurels.”

Or we could just eliminate the idea of unemployment insurance altogether. Who cares what happens to these people that get laid off, anyway? They’re just a bunch of lazy bums who want to suck Bill Hammond’s blood. Where’s the compassion for that, I ask you?

Well, I suppose it’s all academic, since Governor Perry has now officially rejected the unemployment insurance funds. Hope all you business owners that will see your taxes go up more than they needed to will appreciate that. Perry made the announcement right here in Houston, which is somewhat ironic.

Houston’s growth advantage over the rest of the nation during the past five years–oil and natural gas–has not only evaporated in the face of a global commodity bust but has turned into a definite liability. The coming year will see significant job losses in Houston, led by the energy sector.

Via Texas Politics. Too bad Governor Perry won’t be joining any of these folks on the unemployment line until at least 2011, by which time one hopes the job market has improved. It’s good to be the king. A statement from Texas AFL-CIO President Becky Moeller in response is beneath the fold. BOR has more, including Kay Bailey Hutchison’s timid response.

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Will we or won’t we fix unemployment insurance?

There’s a lot of money riding on the answer to that question.

The lure of $555 million in federal stimulus money for additional unemployment insurance has Texas legislators mulling whether to expand unemployment benefits to more workers.

To get that money, Texas would have to implement some key changes to state law — including modifying some eligibility requirements to include tens of thousands of low-wage workers. Such changes have been considered but not enacted in previous sessions.

[…]

Gov. Rick Perry is reviewing the American Recovery and Reinvestment Act signed by President Barack Obama this month and the strings attached to all the money, a spokeswoman said.

The unemployment money would be the mostly likely candidate if Perry were to reject anything from the stimulus package.

Perry has said the stimulus money should be used only for one-time projects, not ongoing expenses.

“The hardest thing to remove from government is a temporary program,” Ken Armbrister, Perry’s legislative director, said at a Wednesday hearing.

[…]

The federal money could lessen the need for new taxes on business, said state Rep. Mark Strama, D-Austin, who is chairman of the Technology, Economic Development and Workforce Committee.

“Failure to adopt the policy changes … would result in a higher burden on business taxpayers in the immediate and near term during the recession” than would expanding the benefits, Strama said.

I can understand the reluctance to taking one-time money for potentially ongoing expenditures. But sometimes these are things you should have been doing anyway, and will at worst take on a relatively small expense while getting a worthwhile return on it. A little more analysis and a little less sloganeering would go a long way here.

The Workforce Commission is still determining how much the change would cost.

But an analysis of a similar 2007 bill put the price tag at about $35 million to $45 million a year as 74,000 additional workers would become eligible for benefits, according to the Legislative Budget Board.

The number, however, would probably be somewhat higher given today’s higher unemployment rates.

That change alone would open the door to Texas receiving $185 million of the stimulus money.

The Legislature has some options for how to tap the remaining $370 million. Lawmakers would need to enact two of four policy changes, such as allowing people to get benefits while searching for part-time work.

The Center for Public Policy Priorities, which advocates for low-income Texans, estimates that all of the reforms combined would cost $55 million to $75 million a year, so the federal money could cover the costs for seven years or more.

No one knows the true cost because that would be driven by how many more people took advantage of the benefits, said Talmadge Heflin of the Texas Public Policy Foundation, which advocates for limited government.

“The upside is all short-term,” Heflin said. “The downside in future years will greatly outweigh any upside.”

Funny, you could say the exact same thing about those big property tax cuts we enacted last session when we had some extra cash lying around. I don’t recall there being a whole lot of angst from certain quarters about how we were going to pay for it going forward – there may have been something about the beauty of the free market, or the Laffer curve, or magic pixie dust, I’m not sure. You want to talk about something that’s tough to get rid of, try repealing an irresponsible tax cut. In contrast, this would cost about $150 million per biennium – likely less in the future when the economy improves and more people are working again – which is about 0.2% of the total state revenue we have for this period. It would also help a lot of people who could really use it, and would be quite economically stimulative, as the recipients would be spending all that money on frivolities like food and housing. Seems like an easy decision to make, if you ask me. Patricia Kilday Hart sums up the hearings, in which Texas Workforce Commission Chair (and former chair of the Republican Party of Texas) Tom Pauken spoke in favor of getting stimulus money, as follows:

So, to review:

1. An escalating unemployment rate means the trust fund is paying out 120 percent more than it did this time last year and

2. At current rates, the trust fund will be broke by fall and

3. Bill Hammond [of the Texas Association of Business] doesn’t want to take any federal stimulus money to fix it because somebody might have to pay higher taxes in the future.

Like I said, seems like an easy call to me. Press releases from the AFL-CIO of Texas and Senators Rodney Ellis, Eddie Lucio, Leticia Van de Putte, and Representative Joe Deshotel, who are urging Governor Perry to declare this a legislative emergency, are beneath the fold.

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So about all those stimulus funds

Remember how Governor Perry had argued against states receiving federal stimulus dollars? Well, he still doesn’t want them, though he’s giving himself some waffle room.

Gov. Rick Perry said Tuesday he’s not sure the state should accept all of its projected share of federal stimulus money — $16.9 billion and counting by preliminary estimates — because of the “mile-long” strings that might be attached.

“In Texas, we actually know it is a good idea to look a gift horse in the mouth. If we don’t, we may end up with an old nag,” said Perry, who has been critical of such federal spending and voiced concern over whether the state could afford federal strings.

“One thing that concerns me is that dollars are going to come into Texas that require us to match those dollars, and then two years from now, those federal dollars won’t be there, but we will be on the hook to pay for those programs going forward,” Perry said.

Funny, I don’t recall that being a condition for property tax cuts. But that’s Totally Different, because, well, it just is.

According to a preliminary legislative analysis, economic stimulus provisions that affect the Texas budget could total about $16.9 billion.

Perry didn’t say which programs he was referring to, and spokeswoman Katherine Cesinger said his staff still is looking over potential allocations to Texas.

One program that raised concern early on was funding for unemployment insurance that would be contingent on state changes allowing more jobless people to become eligible, Cesinger said.

That would be the unemployment insurance fund that we stopped fully funding awhile ago.

Rep. Jim Dunnam, D-Waco, who heads the state House’s Select Committee on Federal Economic Stabilization Funding, said it’s hard to understand the GOP governor being reluctant to take stimulus funding.

“The governor every year comes in and wants half a billion dollars for the (state) enterprise fund to create jobs and stimulate economic growth and he’s going to say we don’t want $20 billion?” Dunnam said. “I find it difficult to understand.”

Perry said he welcomes federal dollars for one-time infrastructure improvements, such as transportation.

“You’ve got plenty of roads and re-doing some things down in Galveston County and that part of the state hurt by the hurricane. We’ll gladly accept those dollars. But we need to say, ‘No, thanks,’ if they’re trying to stick a bill on the state of Texas to expand government,” Perry said.

And what, road and reconstruction projects always come in under budget? Anything we undertake now might wind up costing more later. That doesn’t mean they’re not worth doing. Heck, some things turn out to be sufficiently worthwhile that we decide to spend more on them later. What are we afraid of?

I accept that sometimes federal monies come with unpalatable requirements. I don’t mind having a debate over those things, as long as the Lege gets to express an opinion as well. These decisions need to be made on a larger basis than Rick Perry’s primary campaign. We can always include a sunset provision on anything we’re not sure we want to keep funding two years from now. BOR has more.

UPDATE: In the end, Governor Perry has decided to take the cash. Since that’s what I wanted him to do, I’ll spare the snark about being against it before he was for it. But that doesn’t mean you have to! Here would be a fine place to express your sarcasm. Just be careful about what email address you use.

When you look up “short-sighted” in the dictionary, this will be cited as an example

That’s our Governor, for whom the expression “penny-wise and pound-foolish” is a way of life.

Nearly a year ago, Gov. Rick Perry trumpeted $90 million in savings to businesses by temporarily suspending some of the burden of paying unemployment insurance taxes — money meant to replenish the unemployment compensation trust fund.

The suspended tax was reinstated this month, but officials said it won’t be enough to bridge the gap between the $414 million the state expects to be in the fund Oct. 1 and the $861 million it’s supposed to have.

By law, the fund must keep an amount equal to 1 percent of all taxable wages in Texas.

Now the Texas Workforce Commission must decide whether to raise the tax, issue bonds to meet the shortfall or see if the state could use an interest-free federal loan, said commission Chairman Tom Pauken, a Perry appointee who took office after the tax was suspended by the commission last year.

Pauken said jobless claims will be paid, and that last year’s suspension of the tax didn’t cause the problem.

“We will have the money to pay for the claims,” Pauken said Wednesday. “Here would be my concern: You don’t want to raise taxes substantially on employers at a time when it’s really tough to keep the doors open and keep people employed.

“So we want to try to — if taxes have to go up — make it as modest as possible to fund the system and look at other alternatives first,” he said.

[…]

The replenishment tax is just one part of the unemployment insurance tax. Last March, Perry directed the state to “bring that (replenishment) tax to a screeching halt for this year” when the fund stood at $1.6 billion.

By the end of 2008, the trust fund balance had fallen to $1.3 billion, Pauken said.

So we’d have still had a deficit, but it would have been $300 million less had it not been for Perry’s profligacy, the consequences of which no one could have possibly foreseen last year, when the economy was still peachy. Yeah, that’s the ticket.