Tuesday PM March 3rd, 2009

Pending U.S. home sales sink to new record low…Texans pay almost twice the national average in home insurance rates…Democratic lawmakers call on Governor Perry to accept unemployment money in federal stimulus package…

The National Association of Realtors says pending U.S. home sales sank to a new record low in January as economic woes turned buyers away from the staggering housing market. The trade group said its seasonally adjusted index of pending sales for previously owned homes for January fell 7.7 per cent to 80.4 from a downwardly revised December reading of 87.1. The previous low of 82.5 was set in November. January’s reading was far worse than the 85.1 economists expected, according to Thomson Reuters. The index, which started in 2001, tracks signed contracts to purchase existing homes. Typically there is a one- to two-month lag between a contract and a done deal.

Texas homeowners still pay the highest insurance rates in the nation. That’s despite measures aimed at lowering them and worse weather losses in other states. A study by the National Association of Insurance Commissioners shows the average annual premium for common policies in Texas was $1,409 per year. That’s much higher than the nationwide average of $804. Florida was second at $1,386. The study is based on premiums collected in 2006 — the most recent year for which figures are available. The rate comparison comes as the legislature considers measures to tighten state regulation of insurance companies. Texas historically has been among the most expensive for home insurance. Industry officials blame Texas’ unpredictable weather, which includes hurricanes, hailstorms and tornadoes. A rash of mold claims several years ago also drove up rates. Industry spokesmen said the study showed that premiums are rising faster in other states. The rates listed in the study showed an average premium increase of 2.7 per cent in Texas—a tenth of the increase in Florida.

Some Democratic lawmakers are calling on GOP Governor Rick Perry to accept unemployment money in the federal stimulus package. Texas could receive $555 million in federal stimulus money if it changes the law to allow more people to qualify. Perry has said he is opposed to using the federal rescue money to expand programs. Senator Eliot Shapleigh of El Paso says not taking the money would be a “profound irresponsibility.” The Unemployment Compensation Trust Fund is expected to fall below the legally required balance by October. Perry said it’s unfortunate that some legislators decided to inject politics into the stimulus discussion. He says he’s reviewing the stimulus legislation to determine what strings and stipulations are attached.

A coalition of citizens groups is demanding that the Texas Department of Transportation slow down in selecting road construction projects for federal stimulus money. The groups say they don’t want stimulus money spent on toll roads or highways that tear up environmentally sensitive lands. They said at a Capitol rally that the agency should take more time and get citizen input in deciding how to spend much of the $2.25 billion in federal stimulus transportation money Texas is getting. State transportation officials are set to decide on $1.2 billion in stimulus road projects Thursday. The activists say the department is out of control and has hijacked the federal money.

President Barack Obama says the new road-building initiative in his economic recovery program will create or save 150,000 jobs by the end of next year. Detailing his plans for employees of the Transportation Department, Obama disclosed that some 200 highway construction jobs will start within the next few weeks. To cheers, he said “we are seeing shovels hit the ground.” The president said that thanks to the $787 billion stimulus program that he signed into law last month, “hardworking families can worry a little less about this month’s bills.” He said the number of jobs that will be created or protected in the highway building program will exceed the number of jobs lost in the last three years by Ford, Chrysler and General Motors combined.

Treasury Secretary Timothy Geithner says the administration has inherited “the worst fiscal situation in American history.” Geithner told the House Ways and Means Committee that President Obama entered office facing a $1.3 trillion deficit — about ten per cent of the nation’s economic output. Republicans have complained that Obama’s budget proposal would balloon the deficit even higher, to $1.75 trillion. Geithner said that additional spending is necessary because the previous administration was unwilling to make long-term investments in health care, energy and education.

Geithner says the administration will unveil a series of rules and measures in the coming months to limit the ability of international companies to avoid U.S. taxes. The treasury secretary told the committee that Obama will propose legislation to limit U.S. companies’ ability to shelter foreign earnings from taxation in the U.S. He also said the administration will try to limit wealthy Americans’ ability to use tax havens to avoid taxation.

Federal Reserve Chairman Ben Bernanke says the timing and strength of any economic recovery will hinge on the government’s ability to prop up shaky financial markets. In testimony prepared for the Senate Budget Committee, Bernanke says that although progress has been made on the financial front since last fall, “more needs to be done.” The Obama administration revamped a $700 billion financial bailout program aimed at helping strengthen banks, but has said additional money could be needed.

The Federal Reserve is launching its much-awaited program aimed at boosting the availability of credit to consumers and small businesses. The Fed will lend up to $200 billion to spur consumer lending — for autos, education, credit cards and other things. The bold program, dubbed the Term Asset-Backed Securities Loan Facility, was first announced late last year and originally scheduled to start in February. Participants must request loans by March 17th and the Fed will provide them on March 25th. The Fed says the program has the potential to generate up to $1 trillion of lending for businesses and households.

Venezuela’s state-run oil company plans to slash costs by 40 per cent as it struggles with low crude prices amid the global financial crisis. The president of Petroleos de Venezuela says PDVSA aims to reduce spending on services provided by nearly 250 companies by renegotiating contacts. Rafael Ramirez said that PDVSA is no longer willing to pay “high prices” that service companies charged last year, when oil prices hit $147 a barrel. The faces debts with an estimated 6,000 contractors. Some payments are more than four months overdue. A recent fall in oil earnings, combined with a slow decline in Venezuela’s oil production, have hurt PDVSA’s finances.

A Moscow court has opened preliminary hearings in a new trial of jailed Russian oil tycoon Mikhail Khodorkovsky. Khodorkovsky is serving an eight-year prison sentence on charges his defenders say are politically motivated. He and his business partner Platon Lebedev are now facing new embezzlement and grand theft charges. Khodorkovsky appeared calm and smiled to supporters when he and Lebedev were brought into the heavily-guarded building of Moscow’s Khamovnichesky district court for preliminary hearings. Prosecutors accuse Khodorkovsky of scheming with a group of investors to bilk a branch of his Yukos Oil of 3.6 billion rubles ($102 million). Khodorkovsky was arrested in 2003 and has served most of his sentence at a Siberian prison colony.

Citigroup says it will lower mortgage payments for some homeowners to an average of $500 a month for three months as part of a new program to help the unemployed. Customers who may qualify for assistance include those that are 60 days or more past due on their mortgages or in foreclosure, can pay the reduced amount and have a first mortgage loan that meets certain specifications. New York-based Citigroup says if customers are still without jobs after three months their mortgages will be handled on a case by case basis to come up with the best payment option. Homeowner unemployment assist is geared toward helping people avoid foreclosure.

George County supervisors and a pipeline company have agreed to a $1.6 million settlement of dispute over damage to county roads. The settlement ended months of negotiations following the September 2008 completion of the natural gas pipeline that runs from northeast Louisiana to Lucedale to the Alabama community of Coden, south of Mobile. The pipeline is owned by Spectra Energy and CenterPoint Energy, both of Houston. Board President Kelly Wright says supervisors first requested $2.85 million to repair roads damaged by the pipeline work. The pipeline company’s first offer was $200,000 to $250,000. Wright says 44 roads are included in the settlement.

Time is running out for more than a million taxpayers to file for $1.3 billion in unclaimed tax refunds from 2005. The Internal Revenue Service says that the taxpayers are still owed refunds because they never filed tax returns for 2005. The missing taxpayers have until tax day April 15th to claim their 2005 refunds, or the money becomes the property of the U.S. Treasury. The IRS estimates that half of those owed refunds would receive more than $581. There is no penalty for filing a late return that qualifies for a refund. But most taxpayers get only three years to file or they forfeit the money. Taxpayers must also have filed returns for 2006 and 2007 to receive refunds from 2005.