Perry rejects Dem stealth employment tax increase

Houston Chronicle:

Gov. Rick Perry set up a possible battle with the Legislature today by rejecting about $555 million from the federal government for expanded aid to unemployed Texans on grounds that the money would come attached with too many costly obligations.

Perry announced his refusal of the funds in Houston at a Bering’s Hardware store near the Galleria, where a store official said accepting that share of the nation’s so-called stimulus package might mean having to pay an additional $12,000 a year in unemployment insurance.

"Employers who have to pay more taxes have less money to make their payroll" and would have to raise prices on their products, the governor said. "The calls to take the (stimulus) money and sort out the consequences later are quite troubling to me."

To get the stimulus money, Texas would have to extend unemployment benefits to those who lost their jobs and now are seeking part-time work -- an idea that Perry said Texas has rejected repeatedly, partly because it might discourage people from seeking full-time employment. The White House also want states to expand benefits to more low-pay workers.

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Some legislators want to take the money and take their chances on a tax increase for employers. That seems short sighted to me. The fact is that this program becomes an unfunded mandate in a couple of years and Democrats in Congress want the states to bet that employment will be higher when it does. That is a bad bet since employment is a lagging indicator that will not turn around until a couple of years after the economy does.