DALLAS — As one of 35 states that tapped federal interest-free loans to cover unemployment benefits, Texas expects to issue about $2 billion of bonds to begin repaying them next year, officials said.

Details of the bond issue have not been decided, but the maturities would fall within the five-to-10-year limits allowed under state law, Texas Workforce Commission chairman Tom Pauken told the state House Appropriations Committee Monday.

Pauken is also waiting to see if the federal zero-interest loans that Texas took out last year will be extended beyond this year.

“The commission continues to examine all options available to Texas, ranging from federal borrowing, private bonds, or a hybrid of options to maintain solvency of the trust fund and to ensure eligible recipients continue to receive benefits,” Pauken said. “TWC is waiting until later this year to make any final decisions.”

With the state’s unemployment rate above 8%, Texas is using about $1.7 billion in interest-free loans from the federal government under Title XII to keep paying benefits.

The state’s trust fund is depleted, prompting plans to increase unemployment taxes next year.

So far, 35 states have tapped the Title XII advances to cover jobless costs. Though there is no move to extend the federal lending, Pauken said that Congress could still act before the end of the year.

States will have to start repaying the federal loans next year.

The repayments will come as states are facing severe budget constraints due to falling tax revenue. At the same time, raising unemployment tax rates is seen as a hindrance to hiring.

In Texas, the minimum unemployment tax rate was raised to 0.72% this year from 0.26% in 2009.

The minimum tax will be $64.80 per employee in 2010, compared with $23.40 per employee in 2009.

The maximum tax rate, paid by 3.3% of employers, is 8.6%, up from 6.26% in 2009, Pauken said. The average tax rate of 1.83% for 2010 is up from 0.99% in 2009.

Combined borrowing from all the states so far exceeds $40 billion, including California’s $8.8 billion, the largest debt. California’s unemployment rate rose to 12.6% in March. The U.S. Department of Labor expects 40 states to borrow money eventually to cover unemployment.

Texas Gov. Rick Perry, a Republican who is running for re-election to his third term this year, generated controversy in 2009 when he refused a federal grant of $555 million to cover unemployment benefits under the American Recovery and Reinvestment Act that would not have been paid back.

Then, Perry decided to borrow funds under the Title XII program that did require repayment. Perry, who suggested to a Tea Party rally that Texas might secede from the union, said he was defying the federal government’s violation of states’ rights

Texas borrowed federal funds for unemployment after the previous recession. In 2003, the state issued $1.4 billion of bonds to repay a $300 million federal loan for the unemployment trust and another $1.1 billion to maintain the fund’s solvency.

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