Perry, citing strong economy, orders tax cut for businesses

AUSTIN (AP) - Gov. Rick Perry said Monday he was ordering tax cuts to about 370,000 Texas businesses because of the state's strong economy and low unemployment.

The cut, totaling $90 million, will come from a one-year suspension of the tax that replenishes the state's unemployment fund. The Texas Workforce Commission approved the cut after determining there was enough money to cover unemployment payments in 2008.

"I believe in truth-in-budgeting: when government levies a tax and collects more money than is needed, we must either stop collecting the tax, return the money or both," Perry said in a statement.

Although Texas' unemployment rate went up the two most recent months, the rate reached a 31-year low of 4.1 percent at times last year and remains significantly lower than the national rate of 4.8 percent.

The state also managed to add jobs the past two months even as the unemployment rate was creeping up. Texas led the nation in job creation last year.

Some businesses will remain eligible for a surplus tax credit tied to unemployment taxes. Additionally, employers will save an estimated $270 million on taxes because bonds issued in 2003 to bolster the workforce commission's funding were paid off early.