By: Nicholas Sohr

The governor’s proposed changes to the state’s unemployment insurance system could be trimmed down before it moves forward through the Legislature, the chairman of the Senate Finance Committee said Wednesday morning.

Gov. Martin O’Malley, in one of his key legislative initiatives this year, proposed altering the benefits available to unemployed Marylanders in order to qualify the state for $126.8 million from the federal government. The funds would be used to bolster the state’s Unemployment Insurance Trust Fund and offset the cost of some unemployment tax breaks for businesses.

Business groups oppose the measure, preferring to take the hit this year in hopes of returning to more favorable tax rates more quickly.

“If they don’t think it helps them, why are we doing it?” said Sen. Thomas M. “Mac” Middleton, D-Charles.

Middleton’s committee held a hearing on the governor’s proposal Tuesday afternoon where business leaders resumed their opposition to chasing the federal money.

The changes to the benefits include altering the period during which a laid-off worker must report income, tweaking existing rules for people seeking part-time work and expanding the time during which a person can collect benefits while enrolled in job training programs.

Legislative analysts estimate the legislation would add about $20 million in yearly costs for the trust fund. The fund, which has been stressed by the high unemployment rate, now pays out about $20 million in benefits every week.

O’Malley’s legislation also includes provisions to lower the monthly interest rate on late payments from 1.5 percent to 1 percent, and to require state business regulators to work with companies on payment plans. Most businesses pay their unemployment taxes in the first quarter of the year because the taxes are assessed on the first $8,500 of an employee’s annual pay. The payment plans would allow businesses to stretch their obligation through the year.

“I see a bill moving with at least those two pieces in it,” Middleton said of the payment plans and interest rate cut.

Business leaders have also proposed a host of benefit cuts to offset the expansion of benefits and eligibility in the governor’s bill. At Tuesday’s hearing, a representative of the Maryland Chamber of Commerce suggested requiring laid-off workers to wait a week before filing for unemployment, cutting allowances for dependents, and changing the duration of benefits offered.

“There may be the opportunity for some negotiation here,” Middleton said.

“I haven’t given up hope,” he added.

The bill heads to the House Economic Matters Committee on Thursday.