04.01.09

The state of the stimulus money in Texas

Posted in Around The State, Commentary, Education, The Budget, The Economy, The Lege, Uncategorized at 3:48 pm by wcnews

The bottom line is that at this point how much of the stimulus money in Texas will be spent  is still up in the air.  Here’s what Texas Impact had to say about the unemployment insurance (UI) money, Texas’ Share of ARRA Unemployment Funds.

As it stands now, Texans are blocked from accessing unemployment funds that were set aside for them and will certainly be paid for out of their federal income tax dollars in the future.

The point being that we, Texans, are paying for it, and will pay for it one way or another.  It would be best for Texas if we got the money and it was spent in Texas.  And, as Kuff’s points out,  if it takes a non-sunset sunset provision to get it done, then so be it.

You’d think, after all the high-profile squabbling over stimulus funds for the unemployment insurance trust fund, that the news of SB1569‘s advancement in the Senate might get a bit more notice than this, but apparently not. The only other story I could find was this from the Tyler Telegraph.

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As far as the attempts to come up with a sunset provision that isn’t really a sunset provision, if that’s what it takes to pass this, then that’s fine by me. I think it’s a bit ridiculous to have to go over such hurdles, given that the marginal cost to the state some number of years down the line for expanding its unemployment insurance program and collecting that $555 million in stimulus money today is tiny compared to the overall budget – something like 0.2% of state revenues – and the marginal benefits are substantial, as Ray Perryman has estimated that every $1 from these unemployment benefits would add $2.66 to the economy. That doesn’t even take into account the hit that businesses will take when the unemployment tax gets hiked in the coming months to keep the unemployment trust fund from going dry. All this, and we help a lot more people make it through some hard times intact. Point being, this is a good deal regardless of whether or not we think we might need to repeal it later. I mean, I understand the politics of this. I just don’t understand the logic.

That Perry and TAB are against it shouldn’t surprise anyone, that’s what they do. But as this article points out not all of the “pro-business” groups are against it, If the stimulus ‘math is simple,’ perhaps Perry should check his work.

Oh, there’s a bill that comes due down the road. But it’s way down the road, it’s small, and we may be able to avoid it altogether if Texas can trim its benefits by cutting fraud and abuse.

This recommendation comes from Bill Allaway, president of the TTRA, a nonpartisan group that primarily represents businesses. One study by the Labor Department found about $153 million in annual excess payments in Texas, largely by people who claimed to be laid off from sham jobs.

That’s twice the annual costs of expanding the program, and then there’s the huge federal carrot.

“If we do this right, we can get federal money and make improvements that are needed,” Allaway says.

But instead of figuring out a way to capitalize on the windfall, Perry is slamming Washington and warning of economic death for Texas. His public posturing smacks of politics, not economics, and ideology rather than pragmatism.

“The strings attached to these federal funds could very well strangle an economy that leads the nation in exports and Fortune 500 companies,” Perry said.

Don’t believe it. The costs of the program just aren’t that great.

That about sums it up. If we had any leadership at the top of this state they’d find a way to get this money into the state’s economy that is getting worse by the day. But they’d rather stay true to ideology than do what’s needed.

As Clay Robison in the HChron points out, State leaders can be so stimulating, Perry doesn’t really seem to be worried about much other than ideology when it comes to how, or if, the stimulus money is spent in Texas.

Some of the governors are focused less on shaping the future and more on pulling their states out of an economic ditch.

But when you click on Texas you don’t even get the governor. You get a page from State Comptroller Susan Combs’ “Window on State Government” site. Because her job is to tell you not how the money should be spent but how it was spent, the headline is “Tracking the Texas Stimulus.”

The governor’s only concern seems to be that we not accept $500 million to enhance jobless benefits for laid-off workers. As far as we can tell he hasn’t spent a whole lot of time worrying his nicely covered head about the other 93 percent of the federal funds. (I asked his press office about whether he would be making any proposals. They seemed confused, assuming that federal “strings” dictated how all the money would be spent, which is not true.)

And Texas Democrats in Congress are having issues with the shenanigans that are going on with the stimulus money intended for education, Education stimulus funds in question(tip to Hal).

The Senate Finance Committee on Monday voted out its $177 billion version of the budget, which relies on almost $11 billion in stimulus money.

The House Appropriations Committee wrapped up its budget proposal on Friday and will vote on the bill next week.

But if the state soaks up all the federal stimulus money, there will not be an additional investment in education, which is what Congress wanted, said Dick Lavine, senior fiscal analyst with the Center for Public Policy Priorities.

“The federal money is going to pay for what we would have paid for anyway, for the primary purpose of maintaining the rainy day fund,” Lavine said.

Without cutting into it for education spending, the state’s rainy day fund is expected to have $9.1 billion available.

Texas Democrats in the Congress say that approach does not comport with the law.

Last week, they sent a letter to U.S. Secretary of Education Arne Duncan saying the money should go directly to school districts – not the state.

“We believe that the (stabilization funding) was not intended to allow Texas to maintain its Rainy Day Fund, but rather to immediately invest in our schools to strengthen education and improve student achievement,” wrote the Democrats, including U.S. Rep. Lloyd Doggett of Austin.

As well as using the stimulus money to save the Rainy Day Fund, Not rainy enough for state rainy day fund?.

But the arrival of federal economic stimulus dollars means that the storm recovery costs could be covered by existing state funds.

The 2010-11 budget approved by the Senate Finance Committee this week includes almost $11 billion in stimulus money, which has restrictions on its use. About half of that money is being used to free up existing state dollars that can be used for anything.

With the stimulus money in hand, some lawmakers see an opportunity to save the reserve for a rainier day and use existing state funds for the hurricane recovery, said Rep. Craig Eiland, D-Galveston, who authored the recovery bill.

It’s unclear exactly what it would take for some people to vote for spending the RDF. I’m sure those on the far right would never agree to spend that money. The key is that the stimulus money was supposed to be spent in addition to the budget, not to “save” money for the future. Texas, the rare state that’s not in deficit – with a huge budget hole to fill – and needs to spend the stimulus money, as well as the money that’s already budgeted. If stimulus money is used to pay for already budgeted items than that extra money is not added to Texas’ economy, therefore the money is not spent to stimulate Texas’ economy.

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