The House Committee on Federal Economic Stabilization Funding, Select
81st Legislature
March 12, 2009
2:00 p.m.
E1.014
Pursuant to a notice posted on March 4, 2009, the House Committee on Federal Economic Stabilization Funding, Select met in a public hearing and was called to order by the chair, Representative Dunnam, at 2:22 p.m.
The roll was answered as follows:
Present: Representatives Dunnam; Kent (2).
Absent: Representatives Crownover; Coleman; Darby; Eiland; Ortiz, Jr.; Pitts; Truitt (7).
Pursuant to Committee Rule 2(b), a quorum was present for the taking of testimony and the receiving of evidence.
Testimony taken/registration recorded. (See attached witness list.)
(Representative Pitts now present.)
(Representative Ortiz, Jr. now present.)
(Representative Coleman now present.)
(Representative Crownover now present.)
Representative Coleman moved to adopt a motion in writing for The Select Committee on Federal Economic Stabilization Funding. The motion prevailed by the following record vote:
MOTION IN WRITING By: COLEMAN
The Select Committee on Federal Economic Stabilization Funding of the House of Representatives of the 81st Texas Legislature has taken testimony, received evidence, and gathered information pursuant to its charge by the Speaker of the House.
Based on the testimony, evidence, and information, the Select Committee FINDS:
(1) Since the beginning of the most recent economic downturn, over 250,000 Texans have lost their jobs. In January 2009 alone, 75,800 Texans lost their jobs, which is the largest monthly loss on record.
(2) The state's Unemployment Compensation Trust Fund will have a deficit of at least $800 million by September 2009, which will automatically trigger the imposition of the unemployment replenishment tax (or "deficit tax") on Texas employers.
(3) The Texas Workforce Commission (commission) may be able to temporarily lessen the impact of the deficit tax on Texas employers by either bonding or borrowing, but Texas employers will still have to repay any bonded or borrowed money.
(4) It is credibly estimated that the deficit tax will likely double the overall unemployment tax burden on the average Texas employers.
(5) The American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) (Recovery Act) will immediately provide $555 million to the Unemployment Compensation Trust Fund if Texas law complies with certain criteria. Texas law already complies with a portion of the criteria. To receive the full $555 million, the Legislature must make three modifications to existing law:
(A) Alter the base period calculation for unemployment. Currently Texas does not count the most recent quarter in calculating the base period. To receive the Recovery Act funds, Texas is required to count the most recent completed quarter. The commission estimates the cost of this change at $43.7 million per year.
(B) Alter the compelling reasons criteria for a qualifying job loss. Texas law currently complies with a portion of the Recovery Act requirements for this criteria. The proposed alterations to the compelling reason criteria would permit persons required to leave their jobs due to spousal violence, disability within immediate family or spousal relocation to qualify for unemployment. The commission estimates the cost of this change at $4.6 million per year.
(C) Alter either the training or the part-time worker provisions of Texas law. The commission estimates that the cost of these changes would cost $28 million and $34 million for each year, respectively. The Recovery Act specifies that Texas needs to comply with only one of these provisions.
(6) The Recovery Act allows Texas to delay the implementation of these changes by one year, meaning Texas would immediately receive the $555 million at no cost to the State until 2010. The net gain for Texas through the 2010-2011 biennium would be approximately $474 million to the Unemployment Compensation Trust Fund. If the changes are not repealed by subsequent legislation, the Recovery Act funds would fully fund the modification through fiscal year 2017.
(7) If the funds are not accepted, the deficit tax on Texas employers is estimated to increase to 1.09 percent. If the funds are accepted, the deficit tax will only increase .34 percent. It is credibly estimated that each $1 in unemployment funds distributed in Texas has a $2.24 effect on the Texas economy.
Based on the foregoing, the Select Committee makes the following RECOMMENDATION to the appropriate standing committees of the House and to the full House:
The Legislature should, at a minimum, take:
(1) all actions required to make the necessary changes in Texas law to ensure the receipt of all Recovery Act funds related to unemployment compensation with those changes being made effective by 2010; and
(2) any other actions necessary to receive those funds.
The committee clerk is directed to send a copy of this recommendation to the Speaker of the House of Representatives and each Member of the House.
The motion prevailed by the following record vote:
Ayes: Representatives Dunnam; Coleman; Kent; Ortiz, Jr.; Pitts (5).
Nays: Representative Crownover (1).
Present, Not Voting: None (0).
Absent: Representatives Darby; Eiland; Truitt (3).
At 3:31 p.m., on the motion of the chair and without objection, the meeting was recessed until 4:45 p.m., March 12, 2009.
The committee reconvened at 4:45 p.m. and was called to order by the chair, Representative Dunnam. The roll was answered as follows:
Present: Representatives Dunnam; Crownover; Coleman; Kent; Ortiz, Jr. (5).
Absent: Representatives Darby; Eiland; Pitts; Truitt (4).
A quorum was present.
Testimony taken/registration recorded. (See attached witness list.)
At 9:25 p.m., on the motion of the chair and without objection, the meeting was adjourned subject to the call of the chair.
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Rep. Dunnam, Chair
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Chelsea Reilly, Clerk