Professor Elam

Texas Unemployment Fund is hundreds of millions of dollars below legally required levels.

Students will recall that we studied employer SUTA State Unemployement Tax  requirements in Chapter 13 on current liabilities in Intermed Accounting. Read the article to get an understanding of what is about to happen.

Employers lay off more workers.

Workers file for unemployment benefits.

The state fund runs low.

Claims against employers as well as the new overall  low balance require the state to demand a higher percentage of the current payroll to be paid as potential state unemployment tax to replenish the fund.

This could not be a worse downward spiral. At a time when we need more not less employment, employers are hit with more taxes to pay the unemployed which will act as a brake on hiring anyone else.

The state plans on higher taxes and issuing bonds, really?  I have made the point that the munitipal bond market is going from bad to worse. This is already evident in California and New York. As I have mentioned it is only  a matter of time until the stronger states realize they are being asked to support the weaker, read bankrupt, ones. At some point taxpayers will realize it is every state for itself.

Just this morning I heard someone saying we need prudent management of the problem. At the national level this guy's idea of prudent was $3 trillion of federal debt. Prudent?