‘Fragile compromise’ on unemployment bill 

Posted: 6:48 pm Mon, March 1, 2010
By Nicholas Sohr
Daily Record Business Writer

Legislation that would expand unemployment benefits to more Marylanders gained the backing of two key business groups Monday afternoon and could hit the Senate floor by the end of the week.

The announcement from the Maryland Chamber of Commerce and Maryland Retailers Association signaled the end of the months-long morass of proposals and counterproposals batted back and forth by business and labor interests, lawmakers and the governor’s office.

“This is a very fragile compromise,” said Sen. Thomas M. “Mac” Middleton, the Charles County Democrat who led the negotiations. “I don’t think anybody is going to be wildly in love with it, but I think everybody can live with it.”

Middleton, who chairs the Senate Finance Committee, said his committee will likely vote on the bill in its amended form Tuesday afternoon, slating it for a Thursday arrival before the full chamber.

Senate Minority Leader Allan H. Kittleman, a Howard County Republican and member of the Finance Committee, said he will vote for the bill, assuming no additional amendments are tacked on.

“As long as it’s cost-neutral and does not increase the burden on businesses, I can support it,” he said.

The bill is one of Gov. Martin O’Malley’s top legislative priorities this year. It would qualify the state’s bankrupt Unemployment Insurance Trust Fund for $126.8 million from the economic stimulus package passed last year by Congress.

The state began borrowing last week from the U.S. Department of Labor to keep the trust fund solvent.

State officials expect to keep borrowing through the end of April, when the first wave of tax payments is expected. The stimulus money, they hope, will keep the fund afloat through the rest of the year.

The chamber and retailers’ group were among the most steadfast opponents of O’Malley’s original bill, calling it a short-term fix that created serious long-term problems.

Tom Saquella, president of the MRA, said his members now see the heavily amended legislation as “a good business decision.”

“Nobody likes the stimulus package, but they know the fund can use $127 million,” he said. “It’s less money that the state will have to borrow and it will probably move us sooner to the lower [tax] rates.”

Unemployment insurance taxes shot up for businesses in 2010 as the high jobless rate weighed on the trust fund. The minimum rate in 2010 is $187 per employee, compared to $51 last year. The 2010 rates top at out $1,147.50 per employee.

O’Malley, in SB 107 and HB 91, proposed expanding benefits in three areas to make the state eligible for the federal funds. That money would be used to keep the fund solvent, cover the benefit expansion and pay for $83 million in tax relief for businesses. The tax relief provision was stripped from the bill after business groups argued it would sacrifice the long-term health of the trust fund.

Changing the period during which unemployed workers report their income to become eligible for benefits, adjusting benefits for part-time workers and doubling the 26 weeks of benefits available to people in job training programs would cost the trust fund between $18.4 and $19.4 million annually, according to legislative analysts.

To offset those costs, the compromise bill would eliminate claims filed by unemployed workers who are unable to look for work because of illness, increase the minimum benefit threshold from $25 to $50, increase penalties for employees fired for misconduct and count more of claimants’ outside income against their benefits.

The bill also includes provisions to reduce monthly interest on late payments from 1.5 percent to 0.5 percent and allow businesses to pay their taxes in installments.

“There are things in it we’re not crazy about. But this bill does address our issues,” said Kathleen T. Snyder, president and CEO of the chamber.