During his Monday press conference in which he announced some businesses would be allowed to partially reopen beginning Friday, Gov. Greg Abbott said the state agency charged with overseeing unemployment has been overwhelmed but is working swiftly to provide benefits to those out of work.
According to the governor, the state is working overtime on filling unemployment claims—more than tripling the staff at the Texas Workforce Commission and paying out more than $2 billion in benefits in just a few weeks.
That number—which already comes close to eclipsing the total 2020 funding for the TWC—is only expected to grow as more Texans lose their jobs because of the government-mandated coronavirus shutdowns.
In Texas, unemployment insurance is almost entirely funded by a tax imposed on businesses per employee (self-employed Texans pay this tax themselves). Once collected, those funds are deposited in a trust fund that pays out benefit payments weekly, based on the earnings of the job lost. However, those benefits are capped at a salary of a little more than $50,000, meaning if you’re a high-priced attorney who just lost your $200,000 job, you’re only getting a limited benefit.
While that varies in every state, the limit in Texas is $521 per week for a maximum of 26 weeks. However, the CARES Act, which was recently passed by Congress, funds an increase in the per week allotment and the time in which unemployment can be collected.
Under the CARES Act, from March 29 through July 25 of this year, those on unemployment will receive an additional $600 a week. They are also eligible to collect unemployment benefits for a total of 39 weeks—a 50 percent increase over what was existing in the Lone Star State.
That means someone on unemployment could collect $4,084 a month until they find work.
Who’s going to pay for all of this?
In the short term, it’s the federal government, which is providing a mix of loans and grants to states in order to provide the liquidity they need to issue so many benefit payments. Many states, including Texas, do not have enough in their trust funds to handle a crisis like this and need immediate cash infusions in order to cover expenses.
In the long term, as with any government program, taxpayers will be covering the cost.
Texas business owners can likely expect an increase in the unemployment insurance tax they pay on their employees, though that will likely be delayed until sometime next year. Meanwhile, everyday Texans can expect the state to have to cut costs in other areas or increase taxes in order to fund that tripling of the TWC staff and the increased participation in the other programs run by the TWC.
With Texans taxed enough already and so many families hurting as a result of the Chinese coronavirus and government-ordered shutdowns, tax increases should be off the table entirely. Instead, lawmakers must do what every Texas family does in times like these: prioritize spending.
Abbott, Lt. Gov. Dan Patrick, and the 181 members of the Texas Legislature must analyze needs versus wants and make the cuts necessary to fund Texans’ priorities. Thus far, a few lawmakers have floated the idea of budget cuts, but the majority of them—and importantly, Gov. Greg Abbott—have been quiet on the topic.
The sooner they can begin speaking up and acting, the better.