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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.

From the “If pigs had wings” department

It’s never a bad time to construct a counterfactual.

How could you not take this guy seriously?

What if Rick Perry had never said, “Oops”? What if he could have, for Christ’s sake, just remembered that he had wanted to gut the Department of Energy? What if he hadn’t climbed into a tan coat and Brett Favre jeans and released that abominable Youtube video — you know, the gay one.

In other words, what if Rick Perry hadn’t been Rick Perry? If Rick Perry wasn’t Rick Perry, then Rick Perry would have been a pretty strong Republican presidential nominee. Way stronger than Mitt Romney.
Here’s why: Texas — and Houston in particular — is dominating right now. Americans at their core care about few things. The economy, jobs, and the housing market. It’s that simple. They don’t want to lose their jobs, or their home’s price to dissolve into the mist.

And if that’s the barometer, Perry would have had some staggering statistics to brandish. Texas added 12,500 non-farm jobs in May, the Texas Workforce Commission reported last week. It was the 22nd straight month of growth. What’s more, the state has added nearly 290,000 private sector jobs. This, while the U.S. unemployment rate languishes at 8.2 percent. Texas’ rate, meanwhile, hovers in the mid-6s.

[…]

So what does all that mean? It means that Perry — for all his failings — is in possession of one formidable record of enabling job growth during a time of malaise and tepid economic recovery.

It also means: Thank Allah Rick Perry is Rick Perry. And he’s not in this race.

No question, Texas’ unemployment rate and record of job growth is what made Rick Perry look like a formidable candidate on paper a year ago. You know how it went from there – insert your favorite sports cliche about why they play the games instead of deciding the winner subjectively. As much fun as it is to write alternate histories, there are two things to keep in mind here.

1. Sure, Perry was a knucklehead who stuck his foot in his mouth with regularity, but his “Oops” moment didn’t kill his campaign by itself. Perry had come under vicious attack in the primary for his HPV directive – one of the very few decent things he has done as Governor, though of course it was done for the purpose of enriching a crony – and for his 2001 signing of a state level DREAM Act, which granted in state tuition rates to public universities to the children of undocumented immigrants. In fact, it was his “have a heart” comment in response to criticism of this law that was the start of Perry’s downward spiral. Point being, even candidates who look strong on paper have vulnerabilities that will be exploited, and their strength in one area may not help them against attacks in another.

2. One result of Perry’s swift, gaffe-abetted implosion is that the job creation record that was the centerpiece of his candidacy never really got poked and prodded by his Republican rivals, and it was light years away from being addressed by President Obama’s campaign. There’s plenty to attack about his ecenomic record – many of the jobs that were created are low wage/low skill; much of Texas’ growth has been fueled by immigration; the tools Perry has had at his disposal to lure businesses to Texas – the Texas Enterprise Fund and Texas Emerging Technology Fund – are rife with cronyism and unmet job creation metrics, and even if they weren’t it’s not like this kind of zero-sum strategy translates to the national level; Texas’ consistently low levels of educational achievement portend future economic disaster, and Perry’s response to this was to push for historic cuts in public education funding. And so on and so forth; I’m sure there would be more, probably including some things we’re not familiar with.

Now maybe these things would resonate with a general election audience, and maybe they wouldn’t. Maybe Perry would have a strong counter-argument to them, or would be able to divert attention from them by making successful attacks of his own. We’ll never know. My point here is that everyone looks good on paper until the other side gets to have a say about it. Perry was gone from the race long before Team Obama ever got to ask the rest of the country if they wanted to be more like Texas or not, much as they’ve been framing Mitt Romney’s time at Bain Capital as something less than desirable. If it had become clear that Perry would have been the contender, Obama would have had a strategy for dealing with him and for turning his strengths into weaknesses. Again, maybe it would work and maybe it wouldn’t. We’re choosing our own adventure here, so there is no “right” or “wrong” answer. It’s just that saying the strengths Rick Perry had as a candidate going into the Presidential race would still be serving him as well as they did before he announced his candidacy is leaving the analysis short and ignoring what has happened with the guy who did survive the primary.

Thinking outside the box on the city’s finances

We’ve seen the ideas generated by the Long Term Financial Management Task Force, which I thought lacked a certain amount of breadth to its perspective. Here’s a taste of what else might be out there to think about.

Good Jobs Great Houston, of which the Houston Organization of Public Employees is a member, held a news conference outside Wednesday’s City Council meeting to get their own ideas out. They claim that some of the ideas they had submitted to the Task Force did not make it onto the draft list. Among the union’s ideas distributed Wednesday:

  • Raise the city’s tax rate;
  • Establish a higher property tax bracket on homes with a value exceeding $500,000;
  • Establish a 1 percent income tax on city residents who make more than $30,000 a year;
  • A “blight tax” on foreclosed homes that banks would pay on vacant properties they let deteriorate;
  • End the practice of double dipping — remaining on the city payroll while collecting a pension;
  • Put a cap of $100,000 a year on annual pensions for new hires;
  • Review all outsourced services to see if they can be done more efficiently in house.

There are a lot more, but the Good Job Great Houston and HOPE officials said they want the conversation to include more than what’s already on the Task Force’s 229-item draft list.

As with the LTFMTF, some of these ideas are more practical than others, and some cannot be done without legislative input, possibly even a Constitutional amendment. I’ve been an advocate of rolling back the miniscule property tax rate cuts that were implemented during the Bill White years – the savings for an individual household is minor, but the cumulative revenue for the city adds up. You do have to be aware of the limitations imposed by the revenue cap, however – even if you wanted to, you can only raise the tax rate so much before that would kick in.

I really like the idea of the “blight tax”, as I want to see more thought given to generating growth here inside city limits. The city has been admirably aggressive under Mayor Parker to condemn and demolish derelict properties – Patricia Kilday Hart wrote about a new tool in their chest for that – but it’s only half of the equation. You still have to get someone to build or rehab or otherwise do something useful with the property afterward, and as far as I can tell we’re still short on ideas there.

And if we’re going to go after blight, let’s aim for the biggest target out there – abandoned buildings downtown. There are properties downtown that have been derelict for decades, and that’s some of the most valuable real estate in the city. Some of these buildings are within a couple of blocks of the Main Street light rail line, and would make excellent mixed use/transit oriented projects, if only they could or would be used for something. Do we not have the tools to make something happen, or have we just not put enough effort into it? I don’t know, but I wish we’d put more thought into it. The same is true for other empty or blighted lots along the existing rail line, and the ones that are now being built. There’s been quite a bit of development in the Main Street corridor, but there’s room for much more. If the secret to making Inner Loop housing less expensive is to generate more of it, then these are the places to start. What are the obstacles, and what can we do to overcome them? This needs to be part of the long term financial conversation.

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.

Our education gap

Apparently, we have one in Houston.

The Houston area doesn’t have enough educated workers to fill all the jobs that local industry creates, according to a study released today by the Brookings Institution.

That education gap, in turn, pushes up the local unemployment rate, according to the study, which ranked the Houston area 94th among the nation’s 100 largest regions. The Dallas-Fort Worth-Arlington area came in at No. 96.

The average job in Houston requires 13.53 years of education, said Jonathan Rothwell, senior research analyst at Brookings in Washington, D.C. The average Houston area resident has only 13.31 years.

The study used several years of data from the Bureau of Labor Statistics to determine the type and number of jobs in each region and what kind of education is required to do the work. It compared that to a Census Bureau survey of actual education levels for each community.

You can see the executive summary here and the full report here. Personally, I’m skeptical that such a small difference in the average amount of education makes that much difference, but I suppose one way of looking at it is that it probably reflects college graduation rates as much as anything, and it’s easy enough to see how that could correlate to employment. Anyway, read it for yourself and see what you think.

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.

Subsidies for jobs

Let’s be clear about what this is, shall we?

When Lt. Gov. David Dewhurst crisscrossed the state last year touting his program to provide state subsidies to anyone who would hire unemployed workers, Texas employers lined up.

To the state’s most powerful lawmaker, the rationale for wage subsidies was simple: The Texas economy would benefit and state government could save money if employers would hire Texans who were starting to receive unemployment benefits.

Put them to work rather than put them on the dole.

“We’re talking about creating jobs that will continue long term, not just for several months,” Dewhurst said at the time. “This is smart money.”

Over the past 15 months, more than 3,000 employers -— from conglomerates to mom-and-pop establishments — have answered the call. More than 12,000 people have been hired into jobs in call centers, restaurants, security firms, banks, warehouses and retail stores.

For every person hired into a $15-per-hour or less job, employers received $500 a month from the state for up to four months.

The Texas Back to Work program proved so popular that it spent its $16.3 million in state money in a matter of months and went on to spend an additional $5.1 million in federal funds. The U.S. Department of Labor also gave the program an award for being innovative.

Now after 15 months, Dewhurst has proposed that the Legislature allocate $15 million in state funds to extend the program. And that, in turn, raises questions about how effective the program has been at meeting its goals.

Has the program saved the state money? Has it created jobs? Or has the program used state money to fill jobs that would have been filled anyway?

This is what is commonly called an economic stimulus program. It’s when you spend government money for the purpose of enabling job creation. People tend to freak out when it’s done by a Democratic President, but when a Republican Lieutenant Governor does it, no one bats an eye. I’ll leave it to you to figure out why that is.

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.

Budget cuts are bad for the economy

In case you missed this last week.

Texas’ cuts-only approach to its budget shortfall won’t solve the state’s long-term fiscal problems, according to Standard & Poor’s, a major bond rating agency.

“We believe that a balanced approach that includes both revenue enhancements and expenditure cuts has a higher potential of success in preserving the state’s long-term structural budget balance than a strategy that relies solely on expenditure cutbacks,” wrote S&P credit analyst Horacio Aldrete-Sanchez in a report released last week.

Though S&P is not likely to join the Texas Forward coalition, the analyst’s language mirrors that of the education groups, health and human service advocates and faith leaders that have decried the deep budget cuts.

Aldrete-Sanchez also emphasized that the state’s budget hole is not a one-time problem that will go away as the economy improves.

“In our view, the state’s budget imbalance is likely to reappear or persist beyond the upcoming biennium unless other sources of revenue or additional budgetary flexibility are identified to fill this growing funding gap,” the analysis continues.

I would have thought that this would be bigger news, but that Postcards entry is just about the only place I found it noted. I have no idea why that is. Be that as it may, a similar theme is being repeated elsewhere.

Spending cuts approved by House Republicans would act as a drag on the U.S. economy, according to a Wall Street analysis that put new pressure on the political debate in Washington.

The report by the investment firm Goldman Sachs said the cuts would reduce the growth in gross domestic product by up to 2 percentage points this year, essentially cutting in half the nation’s projected economic growth for 2011.

The analysis, prepared for the firm’s clients, represents the first independent economic assessment of the congressional budget fight, which could lead to a government shutdown as early as [this] week.

[…]

The Goldman Sachs analysis says the cuts would reduce the country’s economic growth by 1.5 to 2 percentage points for the year.

A smaller budget reduction of $25 billion, if approved as a compromise, would have a lower effect, reducing growth by 1 percentage point. The effects would fade over time, the report says.

“Fiscal drag is quickly emerging as a focus,” the Goldman Sachs report says. It says the spending cuts are “the most important near-term risk.”

Via Kevin Drum. And it’s not just Goldman Sachs, either.

A Republican plan to sharply cut federal spending this year would destroy 700,000 jobs through 2012, according to an independent economic analysis [released Monday].

The report, by Moody’s Analytics chief economist Mark Zandi, offers fresh ammunition to Democrats seeking block the Republican plan, which would terminate dozens of programs and slash federal appropriations by $61 billion over the next seven months.

Zandi, an architect of the 2009 stimulus package who has advised both political parties, predicts that the GOP package would reduce economic growth by 0.5 percentage points this year, and by 0.2 percentage points in 2012, resulting in 700,000 fewer jobs by the end of next year.

As Daily Kos points out, Zandi was John McCain’s economic advisor in 2008, and he does call for future budget cuts to bring down the deficit. Just not what’s being proposed now by the Republicans. Really, this shouldn’t be a surprise to anyone. Take money out of the economy, lay people off, and what else would you expect? What’s more, we’re already seeing the effects of “fiscal drag”.

Deeper spending cuts by state and local governments weighed down U.S. economic growth in the final three months of last year.

The government’s new estimate for the October-December quarter illustrates how growing state budget crises could hold back the economic recovery.

The Commerce Department reported Friday that economic growth increased at an annual rate of 2.8 percent in the final quarter of last year. That was down from the initial estimate of 3.2 percent.

The weaker figure was disappointing and prompted some economists to lower their forecasts for economic growth in the current January-March quarter.

State and local governments, wrestling with budget shortfalls, cut spending at a 2.4 percent pace. That was much deeper than the 0.9 percent annualized cut first estimated and was the most since the start of 2010.

They’re seeing the same thing in England, too. Via Steve Benen, who notes that the prospect of austerity-induced job losses is of no concern to leading Republicans. As with the S&P report about Texas, you have to wonder why this isn’t bigger news. Here in Texas, we face the prospect of laying off 100,000 teachers, many of whom will face extremely tough prospects for getting hired elsewhere, plus thousands more education-related jobs being lost. Add on top of that all of the local job cuts. How could anyone think this won’t have a terrible effect on the economy? What exactly is the upside of this?

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

Texas 20/20 on the budget

Via First Reading, a group called Texas 20/20 has taken a look at what other states have done to deal with their budget shortfalls, and how that may apply to Texas in next year’s legislative session.

The author is former Deputy Comptroller Billy Hamilton, who was a high-ranking aide to Democratic and Republican comptrollers.

Here’s an excerpt: “The key lesson from this review of approaches in other states is that most have balanced their budget only by using a variety of approaches and making painful budget and revenue decisions. There is no simple solution to budget problems as large as those that Texas will face in 2011. When the size of the budget gap is large, lawmakers must approach the task of balancing the budget with creativity and innovation. They must also be willing to decide what the key state services are — what must be preserved and what can be pruned. That is the goal. Reality, as the examples in the other states demonstrates, is often different.”

The full report is here. I will simply note two things. One, this is a detailed illustration of what Ezra Klein has called the anti-stimulus, as all these cuts have acted as a drag of nearly equivalent force to the federal stimulus package of 2009. The scary thing is that there’s much more of this to come, with potentially hundreds of thousands of jobs – teachers, police officers, fire fighters, those kinds of jobs – at risk. That’s because state governments, by and large, are required by their constitutions to balance their budgets, all of which acts to magnify the effect of an economic downfall. The federal government can do something about this, and it did some of it last year, but between the utter intransigence and indifference to suffering of the Republican Party and the shameful fecklessness of too many Democrats, we’re unlikely to get any further action from the feds. I can’t even guess how much worse it would have to get for there to be a change in thinking, but at this point nothing is beyond imagining.

The second point is that as useful as this report is, it does not mention the multi-billion dollar structural deficit that Texas faces thanks to that ginormous unaffordable property tax cut from 2006. We may survive this legislative session more or less intact, and we may finally see better economic conditions by 2013, but we’re never going to truly solve our budget issues until we deal with that. BOR and Dave Mann have more.

We have a new illustration of “chutzpah”

From Sen. John Cornyn, who knows a thing or two about shamelessness.

Sen. John Cornyn pinned Democrats with the failure of a plan to extend jobless aid for millions of unemployed workers, only a day after Democrats fell a vote short of pushing through their version of the legislation.

“The blame for what happened has to lie at the feet of Sen. Harry Reid,” Cornyn said. “I don’t have any concerns about backlash.”

Just as a reminder, Cornyn and his cohort have consistently voting to prevent a vote from taking place. Had this been one of those “up or down” votes I used to hear about, it would have passed long ago. The latest measure had a 59-37 majority, which is more than 60% of the vote in favor, but by the Senate’s bizarre rules, that’s not enough. If Cornyn or any Republican other than Sens. Snowe and Collins, who finally budged on this last vote, gave a damn about the unemployed, they’d have quit filibustering these votes long ago. It’s not like there’s some compromise position that Cornyn and the rest of the GOP would be willing to vote for.

Putting it another way, the technical term for what Cornyn is doing is lying. Lying about who’s to blame for this ongoing debacle, lying about the Republicans’ motives, lying about pretty much everything. We should be clear about that.

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.

Some good job news

It’s a start. At least, I hope it’s a start.

A surge in temporary federal Census Bureau jobs coupled with new leisure and hospitality positions helped local employers create 20,200 new jobs during May.

The data, released Friday by the Texas Workforce Commission, marks the biggest one-month April to May increase of the past decade, said Joel Wagher, labor market analyst for Workforce Solutions, which manages job services and training for the 13-county Houston-Galveston Gulf Coast region.

Nearly half of the increase — 47 percent – stems from the temporary census workers, he said. While those government jobs eventually will disappear, Wagher noted that 22 percent of the new positions were in restaurants, hotels and entertainment venues – a sector that typically doesn’t grow this early in the year or so robustly during slow economic times.

[…]

In another positive sign Friday, the state reported that fewer Houston-area residents filed initial claims for unemployment insurance benefits.

In May, 20,893 local residents filed initial claims, according to data compiled by the Texas Workforce Commission. That represents an 8.5 percent drop from the previous month.

And last month’s claims were down almost 20 percent from May 2009, when 26,095 area residents filed unemployment claims.

With fewer people on the unemployment rolls, the Houston area unemployment rate dipped to 8.3 percent in May, the Texas Workforce Commission reported.

Given all the Census-related jobs in this report, we’ll have to see if this is an aberration or the beginning of a trend. One hopes this will also lead to an uptick in sales tax revenues. That won’t make the state or local budget deficits noticeably better, but it can prevent them from getting any worse.

(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.

The recession and the Texas Enterprise Fund

A report worth reading from Texans for Public Justice:

The global recession that hit Texas in 2008 is playing havoc with Governor Perry’s signature business-incentive program: the Texas Enterprise Fund (TEF). A review of 45 TEF projects that received $363 million in public funds reveals that an increasing number of TEF recipients defaulted on their job commitments in 2008—with even more defaults expected to be reported in the 2009 compliance reports that TEF is now beginning to receive.

Run out of the Governor’s Office,1 TEF has been a centerpiece of Perry’s administration, with the governor often convening media events to unveil TEF awards. The political role of the program has become more problematic in the last year. As a brutal economic downturn coincides with Perry’s reelection campaign, the governor has not publicly addressed his job program’s mounting woes. Instead, his office has quietly redefined success. When the 2008 recession struck, the Governor’s Office increasingly amended TEF deals to ease the contractual requirements of what a recipient must do to hold onto its public funds. In its first four years of operation, TEF formally amended just one development deal.2 Since the recession struck in 2008, Governor Perry has signed amendments diluting six additional development contracts.3 While the governor, House speaker and lieutenant governor all approve TEF grants, the Governor’s Office said it acts alone when amending the deals.

The whole report is worth your time to read, as is this DMN story about the report and reactions to it.

Unemployment up in Texas

Not the kind of story Rick Perry wants to see with an election coming up.

The state’s economic recovery hit a snag in December, as employers cut 23,900 jobs after expanding payrolls in October and November.

The Texas unemployment rate climbed to 8.3 percent in December from 8 percent the month before, the Texas Workforce Commission said Friday.

[…]

Despite last month’s stumble, analysts said they still expect Texas employers to create jobs this year as the state recovers from the recession. Mine Yücel, an economist at the Federal Reserve Bank of Dallas, said Texas is likely to add 100,000 to 150,000 jobs this year.

But the comeback is apt to be modest and uneven.

“This is not going to be a quick bounce-back,” Yücel said, discussing the employment figures released Friday. “It’s going to be a slow slog.”

Payroll employment fell by 276,000 jobs last year, according to preliminary data released Friday. That figure will be updated in March based on unemployment insurance records provided by employers, a process called benchmarking.

According to the Dallas Fed, which has performed its own benchmarking on Texas jobs data through mid-2009, the state lost nearly 335,000 jobs last year.

Things are bad all over, and Texas is still better off than most states. But for all the boasting Perry has done about job creation in Texas – some of which is just flat-out lying, by the way – he’s talking about 2008, not 2009. And while he may talk about jobs being created in 2010, as you can see it won’t make up the difference even before we adjust for increases in the state’s population. Look for some new talking points soon.

On the bright side, things are getting better in Houston.

Houston area employers added 2,700 jobs in December, the fourth consecutive month of over-the-month job gains, the Texas Workforce Commission reported today.

In another sign the Houston economy may be stabilizing, fewer Houston area residents filed initial claims for unemployment in December.

Last month, 22,283 local residents filed for benefits, the lowest number for any month in 2009, said Joel Wagher, labor market analyst for Workforce Solutions, which manages employment services and training for the area.

[…]

While December’s data hints at better times, the year-end picture isn’t as bright.

Houston area employers cut 92,500 jobs between December 2008 and December 2009, a 3.5 percent decline.

“That tells the story of the year,” said Barton Smith, director of the University of Houston’s Institute for Regional Forecasting. He referred to 2009 as a bleak year.

Of course, the better Houston does, the better the state overall will do. That’s probably not something Rick Perry wants people to think about too much, either.

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.

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.

It’s hard to be unemployed in Texas

I’m sure this comes as no surprise.

If you lose your job in Texas, you may be out of luck in more ways than one.

The Texas Workforce Commission rejected about a third of jobless claims last year and 27 percent the first half of this year. When jobless people appealed those initial decisions, their chances of winning this year were only about one in four.

The common reason for denials is Texas’ tight list of eligibility standards. The state under Gov. Rick Perry refused to expand them in law even when the federal government offered $555 million more in stimulus money in return. Perry said it would be bad for Texas in the long run.

“Texas has never made the changes necessary to reflect the changing work force, so our unemployment system is still based on the model where daddy goes to work at the factory at the same place for 40 years,” the Texas AFL-CIO’s Rick Levy said. “Now, fewer and fewer people work like that, but our eligibility determinations are still based on that model, so a lot of people fall through the cracks.”

In addition, when employers appeal benefit decisions, they’re more likely to win than jobless people who appeal denials. Appeals of staff decisions first go to an agency tribunal of upper-level staff, then to the three-member, Perry-appointed commission.

“I think that the (governor’s) appointees have had a general bias toward the business point of view in these matters,” Levy said.

I think the fact that the Senate passed a bill to expand unemployment insurance eligibility and thus accept the stimulus funds suggests that this is something that could be changed when we finally get a new Governor. No guarantee, as I’m sure many of the Republicans in the Senate were swayed by the economics of taking the federal funds versus borrowing a bunch of money to make up for the shortfall, but it’s at least possible. Interestingly, this may be relevant in the next session.

As Perry fends off jabs by foes including GOP U.S. Sen. Kay Bailey Hutchison and Democrat Tom Schieffer over rejecting the additional stimulus money, the campaign could make a difference. Texas has until Aug. 22, 2011, after the next regular legislative session, to apply for the stimulus funds for jobless benefits if lawmakers and leaders decide to make the necessary changes in benefits.

I don’t remember hearing this before now, but it’s nice to know we could get a second bite at the apple. I just hope we’re in a position to take advantage of it.

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.

Whatever Ricky wants

It’s too early to say how much of Rick Perry’s self-proclaimed agenda will get enacted this session, as much of it hinges on the budget reconciliation process as well as on legislation that hasn’t been taken up by one chamber or the other.

Some of his top goals were resupplying the Texas Enterprise Fund and the Emerging Technology Fund, which he uses to create jobs in Texas reward his cronies while making grandiose and unverifiable claims about job creation; changing the state business tax to exempt small companies with less than $1 million in revenue; and approving a voter identification law.

Lawmakers writing the two-year spending plan seemed willing to put money into Perry’s job creation funds, but whether he gets the approximately $500 million combined he wanted for the accounts is far from certain. Lawmakers want more oversight of how the funds’ money is spent. The House, in its version of the state budget, put restrictions on the enterprise fund money to try to force Perry to accept $555 million in federal stimulus money for unemployment benefits.

A House-Senate conference committee is working out a compromise budget plan, so several money items on Perry’s wish list won’t be known until that deal is finally struck.

An increase in the business tax exemption for companies from the current $300,000 to $1 million in revenue won approval in the House but has not made it through the Senate.

The Republican-backed voter identification bill, a highly charged political proposal that would require Texans to show additional ID at the ballot box beyond a voter registration card, won passage in the GOP-dominated Senate after grueling testimony and debate. Odds for the bill are slimmer in the House, where the partisan makeup is almost even.

I made a slight edit to that first paragraph to more accurately reflect the truth of the situation. I have no idea how any of this is going to play out. Recent history has shown that while the House in particular has been willing to take a slap at Perry here and there, in the end the Governor has won a lot more of these staredowns than he’s lost. On the other hand, he doesn’t have Tom Craddick twisting arms for him this time around, and with the miniscule Republican margin, he may just suffer a few setbacks. Bear in mind that as long as Speaker Straus continues the tradition of not voting on legislation, if Rep. Ed Kuempel remains on the sidelines any straight partisan vote will be a tie, on which legislation fails to pass. Voter ID in particular may not be passable now, if Dems stick together. Just whipping Republicans won’t be enough.

There’s another wild card in this, which the article doesn’t discuss, and that’s the possibility of a special session, which some people I’ve spoken to think is inevitable. Rep. Kuempel’s health could be a factor in that as well – if he’s at full strength, that bodes better for the chances of any legislation Perry would push in a special session. The advantage to calling a special session for Perry is that it gives him another 30 days to pander to his base, as well as the chance to pick up any agenda items that fall victim to the calendar. On the other hand, he can’t raise money during a special session, and there’s always the chance he’ll still fail to get stuff passed, thus providing ammunition to KBH. Again, it’s hard to say how this might play out, but the possibility is definitely there, and I’m a bit surprised the story didn’t bring it up.

More unemployment funds available

The bad news is that Texas’ rate of unemployment continues to rise. The good news is that this means more federal funds for unemployment insurance are available, and these come with no conditions on them.

Texas now qualifies, thanks to the state’s steadily rising unemployment rate, for $250 million of string-free federal money. That money would provide another 13 weeks of unemployment benefits — at no cost to the state — for some 70,000 workers whose benefits are set to expire beginning in July, according to the Center for Public Policy Priorities.

There is a catch, however. The Legislature needs to make a technical tweak to state law and the only bill that would be germane and appears to be moving is Senate Bill 1569.

That bill would enact the necessary changes for Texas to access $555 million of federal money to expand unemployment eligibility. But that money comes with strings that Gov. Rick Perry has said are unacceptable.

The bill passed out of the Senate weeks ago and is lingering in the House Calendars Committee. It could come up early next week — and likely pass. But that would not be soon enough to allow time for a veto override should Perry choose to exercise that authority.

Rep. Mark Strama, D-Austin, said House members intend to attach the tweak to SB 1569 when it comes to the floor. The additional $250 million — and the tens of thousands of unemployed workers that would get extended benefits — might just change the dynamic for the governor, said the bill’s proponents.

Bill author Sen. Kevin Eltife, R-Tyler, said he has long kept hope alive that Perry would not veto the bill and this money has stoked his hope.

I had hoped that SB1569 would have been taken up in time to try to override a veto, but apparently that won’t happen. Burka says the votes weren’t there for the override anyway, and thought the bill was dead as a result. I certainly hope it passes regardless; even without this extra incentive, I say make Perry veto it if that’s what he intends to do. Given the way some other Republican governors have folded on the issue, it’s not out of the question that this was all just a bluff. Given the extra funds that are now available and the fact that the unemployment trust fund will be depleted as of July, I don’t see how the Lege can’t force the issue.

And if more incentive is needed, here’s the CPPP with some hard figures.

As of May 5, more than 353,000 Texans were receiving unemployment benefits, more than triple the number of Texans receiving UI benefits a year ago. Currently pending in House Calendars, SB 1569 strengthens our UI system to protect unemployed Texans and qualifies Texas for $555 million in federal funding through the American Recovery and Reinvestment Act (ARRA) for our UI Trust Fund. But the Legislature has overlooked an entirely separate pot of money in the ARRA that is equally important. About 70,000 Texans are expected to exhaust their federal Emergency Unemployment Compensation (EUC) beginning in July. The ARRA will pick up the 100 percent of the costs to extend UI for these Texans, delivering more than $250 million in federal funds into the Texas economy without any state costs. In order to qualify, Texas must change its extended benefits statutory trigger to activate the program; the change can expire when the full federal funding phases out in 2010.

Emphasis in original. The CPPP has put together this chart (PDF) showing how many people per House district stand to lose EUC funds, and how much money is at stake, if SB1569 doesn’t pass. I say if that’s really what Rick Perry wants, let’s give him the chance to take it. As this is a bill that has already received Senate approval, it has until May 26 to pass. Let’s get it done, please.

UI update

The headline says it all: GOP holds key to unemployment stimulus dollars.

Against the wishes of Gov. Rick Perry, lawmakers are pressing ahead with efforts to claim $555 million in federal economic stimulus money for unemployment benefits.

With all of the Senate Democrats already on board, a small group of Republican senators hold the key votes needed for passage.

Sen. Kevin Eltife, R-Tyler, is rounding up votes for his bill that would make changes in the state’s unemployment program so that Texas can qualify for that money.

Perry made national headlines last month when he said he doesn’t want the money because changing the program would mean increasing the size of government and higher costs for employers. Eltife says the unemployment fund is in such bad shape that it needs the stimulus money.

The Tyler Republican needs support from two-thirds of the Senate to bring up his bill for consideration, which means he’ll need to win over at least eight of his 18 Republican colleagues. “I’m pretty close to getting the two-thirds I need,” Eltife said this week.

[…]

“It’s really easy to do a 20-second sound bite to make the public believe that it’s best not to take the money,” Eltife said. “It’s a lot harder to show in details the numbers and why it makes sense to take this money. And I think when you can get one-on-one with elected officials and explain it to them, you can get support.”

Lt. Gov. David Dewhurst, who presides over the Senate, discussed the bill with Eltife on Wednesday evening and said he would look at it further. “If there’s a net gain to Texas and there’s no harm to Texas business, then I would think all of us ought to be supportive,” Dewhurst said. “It’s probably a week too early to give a verdict on that.”

It’ll be interesting to see just which Senate Republicans support this. If I had to guess, I’d think maybe Kip Averitt and John Carona, both of whom have had sensible things to say about government spending this session, and Steve Ogden, who I think could be persuaded by the economic case, might be on board. On the other side, there’s no way Dan Patrick will be for this – frankly, I’d be surprised to see any of the Harris County GOP delegation (Jackson, Huffman, Williams) vote for it. Beyond that, who knows? There must be more than this if Eltife is correct to say he’s close to getting the votes he needs. Maybe if Dewhurst is on board, it can happen. We’ll know soon enough, I suppose. Thanks to EoW for the heads up.

By the way, according to Burka, if unemployment levels in Texas stay as they have been for one more month, the amount of stimulus funding available to us would increase to $600 million.

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.

Property values declining

I have three things to say about this.

The housing slump that has battered much of the country for two years finally has trickled down to Harris County, where residential property values have declined or stagnated for the first time since the oil bust of the 1980s, the county’s top appraiser said Friday.

Nearly half of homeowners saw their property values decline this year, while a third saw no movement, Harris County Appraisal District chief appraiser Jim Robinson said. Just under 20 percent of properties increased in value, mostly in neighborhoods featuring homes worth more than $500,000.

HCAD has finished appraising 860,000 of the county’s approximately 1 million homes, and homeowners’ value notices should begin arriving in mailboxes in the next few days, Robinson said. The district will spend the next two weeks appraising the remaining homes, mostly new construction and properties damaged by Hurricane Ike.

The total value of the 860,000 homes that have been assessed has declined by about 2.5 percent from last year, Robinson said.

It will be difficult to determine how the sputtering real estate market will affect local governments, which rely heavily on property taxes to fund operations, until all residential and commercial appraisals are completed. Robinson said his office is reporting declining values for many commercial properties after years of soaring appraisals.

“I think there will be some jurisdictions, perhaps a significant number, that will see their tax base less than it was in 2008,” Robinson said.

A decline could force budget cuts or tax rate hikes by some local government entities that have watched their tax revenue grow steadily in recent years.

But local leaders said they have assumed a slowdown was imminent and budgeted accordingly.

1. In a sane world, this would move the biennial crusade for appraisal caps to the back burner. In the world we live in, where there are Republican primaries to be won, I’m not so sure. I must admit, between voter ID and the stimulus, most other agenda items have gotten drowned out to some extent. I haven’t heard much at all about appraisal caps lately. I just think that’s temporary, and not indicative of anything.

2. By the same token, this will probably make it even more difficult to pass sales price disclosure legislation, which is intended to ensure that commercial and high-end residential properties are appraised fairly and accurately. Not that such legislation was likely to pass anyway,

3. This is another reason why federal stimulus money is so important. It can and will help local governments bridge their budget deficits in ways that will let them avoid making the kinds of cuts that would greatly exacerbate the effects of the downturn; specifically, it will help them not have to lay people off. The fewer people that lose their jobs, and the more that feel confident they won’t lose their jobs, the better for the economy.

Not everybody isn’t hiring

The downturn in the economy has created an opportunity for the Houston Police Department to bolster its ranks.

A year ago, the Houston Police Department could barely muster enough recruits to fill a 70-seat academy class. Now with 1,000 applicants in the pipeline, HPD is benefiting from the nation’s [worsening] economy, and so are several other police agencies in the Houston region.

Since September, HPD has seen a steady uptick in applications, jumping from 280 to nearly 800 last month, according to police records. The Harris County Sheriff’s Office also has seen a noticeable increase in the number of recruits taking the initial hiring test. The department usually draws about 50 people, but the number has doubled in the past few months, sheriff’s officials said.

“I think a lot of people know that government jobs are a place where they can get pretty steady employment and the benefits are good,” said Houston Police Chief Harold Hurtt.

The ample applicant pool is a major turnaround from a couple of years ago when many agencies struggled to find qualified recruits and had to compete with each other to attract potential officers. Last year, HPD began offering $12,000 bonuses to lure candidates to its academy.

Hurtt’s goal to boost the city’s police ranks by more than 1,000 officers by 2010 will likely be much easier to reach.

The story notes that other area law enforcement agencies, such as various Sheriff’s offices, are seeing a boost in applicants as well. I imagine it’s the same for other public service sectors, such as prison guards, teachers, and government. It’s also probably good for military recruiting.