published Tuesday, February 24th, 2009

Perdue, Bredesen may reject jobless stimulus funding

by Herman Wang

WASHINGTON — Tennessee and Georgia may turn down some of the economic stimulus money if the restrictions outlined in the package cause budgetary hardship in the future, the governors said Monday.

After meeting with President Barack Obama, Tennessee Gov. Phil Bredesen said some provisions in the package for unemployment benefits would force states to expand their programs permanently, even though the stimulus funding only lasts for two years.

“We are evaluating this piece of money, whether it makes sense for us to take it,” he said. “We may well be one of the states that say we can’t take on that portion of it.”

Of issue is the package’s unemployment modernization provisions, which require states to update their unemployment insurance systems and provide jobless benefits to workers who now don’t qualify for benefits.

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Tennessee will receive $141 million for the modernization program, while Georgia will receive $216 million, if the state legislatures approve the funding.

“We have an unemployment fund which is not in good shape right now,” Gov. Bredesen said. “We’re in the position of going back to our Legislature this year for changes in our tax structure just to keep our fund whole, and taking it to a new level may be too much of a lift for the Legislature this spring.”

Georgia Gov. Sonny Perdue said he is examining all aspects of the stimulus bill to determine whether his state should accept any funding. The unemployment funding, in particular, could cause Georgia to raise unemployment taxes when the stimulus money runs out, he said.

“We won’t compromise if we’re left with filling a hole that requires higher taxes for Georgia businesses at the end of it,” Gov. Perdue said.

Georgia Labor Commissioner Michael Thurmond estimated the extra federal funds should help shore up Georgia’s unemployment insurance fund more than it will cost the state, despite reservations from Gov. Perdue.

“It will strengthen our unemployment trust fund and reduce the probability of increased taxes on our employers in 2010,” Mr. Thurmond said.

Both governors stressed that they still are evaluating all the details of the bill and that no decisions have been made yet on rejecting any funding.

Overall, Tennessee is slated to receive $4.3 billion and Georgia will get $6 billion from the $787 billion package that Congress passed Feb. 13.

“Most of this money is usable, but I want to be able to look my grandchildren in the eye 20 years from now and tell them what they got when they’re paying the bill,” Gov. Perdue said.

Gov. Bredesen took issue with some Republican governors who emerged from the National Governors Association meeting with Mr. Obama on Monday and criticized the stimulus package as wasteful, focusing mainly on the unemployment funding. Louisiana Gov. Bobby Jindal and South Carolina Gov. Mark Sanford led the criticism at an impromptu news conference outside the West Wing, as other governors looked on.

“I’m sorry the way this developed out here,” Gov. Bredesen said. “The conversation with the governors of South Carolina and Louisiana in the room, I would say, were more supportive and more conciliatory about these things than they were in front of the cameras here.”

President Obama, in his remarks to the governors, said the complaints overshadow the agreement between Republican and Democratic governors on 90 percent of the bill.

“I think there are some very legitimate concerns on the part of some about the sustainability of expanding unemployment insurance,” he said. “What hasn’t been noted is that that is $7 billion of a $787 billion program.”

Jim Brown, the Tennessee director of the National Federation of Independent Business, said the group would “absolutely” oppose accepting the unemployment insurance funds if the state would be obligated to continue providing the new benefits after the federal dollars ran out.

“You got new benefits and no (permanent) funding for it with the state holding the bag,” he said. “I think there are concerns.”

Republican Alabama Gov. Bob Riley told The Associated Press on Monday that accepting $100 million from the stimulus would lead to higher taxes on businesses and possibly workers when the federal money runs out in about four years.

His estimate: $28 million annually.

“Increasing taxes is not my idea of stimulating the economy,” Riley said.

To accept the money, the Legislature would have to rewrite Alabama’s unemployment compensation laws to expand who is covered, including many low-income and part-time workers. Riley said he will not recommend legislators do that.

Staff writers Dave Flessner and Andy Sher and The Associated Press contributed to this story.

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alprova said...

When are our leaders going to wake up?

These three Governors are not looking at the big picture. This country is in crisis at the moment and people need help. I'm tired of the rhetoric. Unless job losses are reversed, and someone unlocks the chastity belts currently being worn by Bankers, there will be no taxes to assess on anyone.

If decisions are made only in terms of how those decisions will affect businesses, then there is no hope for this country. No business can survive without patrons. The only hope for recovery begins by putting people back to work, by whatever means necessary to do it. The result will be an immediate and massive sigh of relief. Spending will resume, and perhaps even boom. The tax consequences will be dilluted because revenue will begin flowing. Sales taxes will fill coffers once again.

I'm a peon with no financial training whatsoever, but some things are simple common sense. People are not going to spend freely in an economy when people are losing jobs every week.

People who make more than $250,000 per year, regardless of how their income is derived, are not facing tough decisions unless they are stupidly living on the edge. They will not be facing them if their income taxes increase as is proposed.

People who are out of work TODAY are suffering losses of between 30% and 70% of what they were earning until they lost their jobs. They are concentrating solely on spending for the necessities of life. Call it class envy if you must. The connotation is completely irrelevant to all but those at the top who are in a postion to look down their noses at others.

So PLEASE Governors Bredesen, Purdue, and Riley...spare us the worn out lines that people no longer believe. The fact of the matter is that had all of you budgeted for hard times, you would be dipping out of reserves to weather the storm, rather than discussing the tax implications of accepting Washington's welfare benefits that you begged for mere weeks ago.

You have more to worry about at the moment. There are people who have far deeper problems NOW, more immediate needs that are far more pressing at the moment, and they deserve your consideration NOW!!

I'm one of them.

What was that?..."Get a job?" I'd love nothing more. God knows I have been trying to find one.

In all of my 50 years on this earth, I've NEVER had more trouble finding a job.

Just remember one thing; While you are worrying about ticking off businesses that may or may not survive this crisis with a 5%-10% increase in their taxes a couple of years from now, I'm scared to death that in 8 to 12 weeks I will not be able to feed my family.

So pardon me if I am not exactly symathetic to your dilemma at the moment.

February 24, 2009 at 9:11 a.m.
Ferrari said...

Hey alprova, wake up yourself ! who do you think creats jobs? the government ? You know that was a great worked for almost 100 was called RUSSIA..... Even Putin has advised the US not to go down this road to you wont hear that on the left wing media

February 24, 2009 at 10:50 a.m.
rainbo4x24 said...

I swear you republicans can not get past the fact that Bush really screwed up this country. it's sad. I have seen so much ignorance on so many different post on the net its just unreal. The first poster made so much sense these governor's that aren't wanting to take some of this money is not thinking of the people as far as were they next meals are going to come from or how are they going to pay rent/mortgaes,electric etcso please tell me. I haven't seen the job market this bad in so long I now realize why i left this state 7 years ago and went to FL. it is plain to see that none of our elected offcial's care about the ones that they are suppose to be they aren't and we need to take our country back over. Bottom line is we need help and now. It seems to me i may be wrong that we have lost more jobs to over seas places in the last 8 yrs. than any other time period we need to tax companies more that outsource jobs and then they may think twice about it and when they bring the jobs back lower there taxes.

February 24, 2009 at 1:07 p.m.
tgs4tenn said...

Niether government nor business create the necessity for new jobs. That is created by demand on the system. Demand is created when consumers have money to spend. When demand for a good or service exceeds a supplier's capacity to satisfy it, the supplier is forced to increase the capacity by hiring. Giving a supplier more money through tax cuts will not cause him or her to hire workers he or she does not need. It simply means he or she will make more money faster.

February 24, 2009 at 2:32 p.m.
alprova said...

Farrari, I am under no illusion that the Government creates jobs in this country, despite the fact that our Government is among the largest employers in this nation.

You are presuming way too much in thinking that I am calling for socialism. You may have tipped that glass of red Koolaid back one time too many if you believe that Putin ever warned anyone to avoid socialism, much less this country. The man lives and breathes the word, and he detests this nation with a passion.

No one is proposing to increase the taxes on businesses of any size. This is a totally contrived concept that is repeatedly offered by Republicans and used to scare the crap out of people who own businesses. Businesses do not pay taxes. Any taxes that that businesses are assessed is rolled into the cost of the services or products they sell to their customers.

Our system of national taxation, albeit a very flawed and counterproductive method, is based on assessing a percentage of what people earn. A person who makes more than $250,000 per year is in a far better position to part with a true 20% in adjusted gross income to pay taxes, than someone who makes $25,000. Like it. Don't like it. There are minimum costs to living life. Personally, I think I could live rather well on $200,000 after my taxes were paid.

Now I don't know your status in life, nor does it really matter what it may be. If you make more, you should pay more.

I have a fine suggestion to offer those who resent paying higher amounts in taxes. Take the income amount that places you into a higher tax bracket that you detest and pay it to your employees. They will be thrilled to receive it and will gleefully pay an increaseed amount in taxes on their higher income. You probably will not have to replace them for years to come.

I think it's a win-win proposition.

February 24, 2009 at 2:46 p.m.
ron said...

I'm not so sure that governments can't create jobs. Construction work strikes me as a very good manual labor job. Tomorrow night I will be enjoying a concert in a theater that was built in 1936 with WPA funds.

I would think that those who built that theater thought they had a job. Further, it looks like they did a pretty good job, since the place is still standing and used regularly.

February 24, 2009 at 3:36 p.m.
mphs_bbq said...

This comment is pending approval and won't be displayed until it is approved.

Born and raised in TN. Graduated college and grad school in Memphis (Go Tigers!). Live in CA and work in Chicago now. I speak with inside and outside experience.

TN borders more states than any other state in the Union (8). Every state bordering TN is on track to receive a share of the $8 billion stimulus allocated to high speed rail. Tennessee is not on the map!

Instead of turning money away, Bredesen and those Blue Dog Democrats like Cohen, Cooper and Tanner who voted against The American Recovery and Reinvestment Act of 2009 need to be pressing for rail funds that connect to the planned rail corridors and to the key cities of Memphis, Nashville, Knoxville, Chattanooga, Jackson, Dyersburg, Bristol/Johnson City.

Get on the train guys!

February 25, 2009 at 9:47 a.m.
Califemme said...

More brilliance from Alprova..."I have a fine suggestion to offer those who resent paying higher amounts in taxes. Take the income amount that places you into a higher tax bracket that you detest and pay it to your employees. They will be thrilled to receive it and will gleefully pay an increaseed amount in taxes on their higher income. You probably will not have to replace them for years to come.

I think it's a win-win proposition."

Bwahahahaahahahahahaha!!! Something for nothing, right Alprova?

February 25, 2009 at 2:49 p.m.
Califemme said...

More brilliance here from rainbo4x24... YOU left a DEMOCRATIC run state and moved to one run by a REPUBLICANS, and you have the nerve to complain?? Losers, all of ya!

February 25, 2009 at 2:52 p.m.
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