Perry: No thanks on $555 million in U.S. jobless aid Perry rejects $555 million in federal stimulus money

From the center of a Houston hardware store, Gov. Rick Perry ignited a debate about Texas job cuts, business taxes and President Barack Obama’s so-called economic stimulus program Thursday by rejecting the federal government’s offer of $555 million in aid to the unemployed.

The action now moves to the Legislature, which can bypass Perry and take the offer as long as it changes state laws and blocks Republican Perry’s potential veto. Democratic lawmakers said Thursday they will try.

Perry said the money would come with too many strings attached. Taking the half billion would require the state to assist qualified out-of-work residents seeking part-time jobs, an idea that Perry said the state has rejected before, partly because it could discourage them from seeking full-time employment.

The federal money injection would also make Texas extend benefits to more low-paid workers, and Perry said the overall expansion would force business to make higher unemployment insurance payments.

He announced his stance near the Galleria at Bering’s Hardware, where descendants of the founder said they would have to pay about $12,000 more a year into the unemployment insurance fund to cover their 170 full- and part-time workers.

“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.”

What the critics say

Opponents said Perry was spurning workers hurt by the plummeting national economy. Taking the federal money would save on taxes and prices in the long run, they said.

“Texas families are hurting and are worried about how they are going to keep their homes and pay their bills,” said state Sen. Rodney Ellis, D-Houston. “Today, Gov. Perry told them: ‘good luck with that.’ If the governor won’t do his job, we’ll go around him.”

Republican Jim Pitts of Waxahachie, chairman of the Texas House Appropriations Committee, seemed prepared to join forces. He voted to accept the federal unemployment aid. He was joined by four Democratic state representatives at an Austin meeting of a legislative committee studying the stimulus aid. Rep. Myra Crownover, R-Denton, voted no.

Waco-based economist Ray Perryman had just told the committee, “We’re probably better off taking the money.” Without the funds, Perryman said the state’s unemployment fund is projected to run dry this year, possibly triggering higher unemployment insurance levies on employers even without the state’s acceptance of federal funds.

The latest figures

With a rising unemployment rate of 6.4 percent, well below the rate of other big states, Texas reported a record loss of 77,800 jobs in January.

In 2008, 20 percent of out-of-work Texans were eligible to collect benefits, according to the U.S. Labor Department.

Only South Dakota, at 18 percent, had a lower eligible portion.

U.S. Sen. Kay Bailey Hutchison, primed to face Perry in the 2010 Republican primary for governor, warned about consequences like the one mentioned by economist Perryman — without saying whether Perry made the wrong decision: “With the state unemployment fund dangerously close to falling below the legal threshold, it is imperative (he) does nothing that potentially burdens small businesses with higher taxes in tough economic times or pushes those who have recently become unemployed and their families into further economic peril.”

Bernstein reported from Houston, Scharrer from Austin. Chronicle Reporter L.M. Sixel contributed to this report.

alan.bernstein@chron.com

gscharrer@express-news.net