The Hogan administration has yet to decide whether to sign on with the Trump administration’s plan to extend unemployment plans by executive order, a proposal that potentially could put Maryland and other states on the hook for billions of dollars.
“We are currently reviewing the legal ramifications of the order, as well as its potential impact on the state budget,” said Shareese Churchill, a Hogan spokeswoman.
A spokeswoman for the State Department of Labor said the state’s unemployment trust fund balance as of Aug. 7 was $428.7 million. The state appears to have paid out more than $800 million from the trust fund since March 9, when the coronavirus pandemic began to surge through the nation’s economy.
Trump announced an executive order Saturday that extends additional unemployment payments of $400 a week to help cushion the economic fallout of the pandemic. Congress had approved payments of $600 a week at the outset of the coronavirus outbreak, but those benefits expired Aug. 1, and Congress has been unable to agree on an extension.
Under President Donald Trump’s plan, the $400 a week requires a state to commit to providing $100.
In a tweet Monday afternoon, Gov. Larry Hogan said that “while Maryland welcomes any relief, there is no substitute for a real bipartisan agreement.”
State Labor Secretary Tiffany Robinson told state lawmakers in July that Maryland will inevitably have to borrow from the federal government to replenish its unemployment benefits fund. The best of seven scenarios worked up by the agency was to borrow more than $1.2 billion by the fourth week of August.
Those loans are interest-free under the CARES act passed earlier this year, but must be repaid in full by Dec. 31, 2020. Loans not paid back by then begin accruing interest on Jan 1, 2021.
The department sent a letter to U.S. Labor Secretary Eugene Scalia asking for an extension of the interest-free period to Sept. 30, 2021. The state also requested that the federal government make the loan a grant and allow the state to replenish its fund without having to sharply increase the per-employee surcharge assessed employers. Currently, the rate is at its lowest possible.
The last time the state borrowed from the federal government was in 2010 during The Great Recesssion.
“We are in a difficult state right now compared to then, ” she told lawmakers in July when the trust fund balance was around $615 million. “It is likely that we will need to borrow going forward.”
Whether Trump has the constitutional authority to extend federal unemployment benefits by executive order remains unclear.
Many states are already facing budget crunches caused by the pandemic. Asked at a news conference how many governors had signed on to participate, Trump answered: “If they don’t, they don’t. That’s up to them.”
Trump expressed a different view on Sunday night, following a day of state officials questioning how they could afford even $100 per person in additional weekly payments. He told reporters as he returned to Washington that states could make application to have the federal government provide all or part of the $400 payments. Decisions would be made state by state, he said.
Several state officials questioned how Trump’s initial proposal would work and often expressed doubt that they could afford to participate at the level Trump initially set without using federal funds.
Aubrey Layne, secretary of finance for Virginia Gov. Ralph Northam, a Democrat, said in a phone interview Sunday he believes it would be feasible for Virginia to participate in such a program if states are allowed to use money that’s been allocated to them under the already passed CARES Act. He said his preliminary understanding is that states can do so, but he and others are waiting to see the rules published.
Details about the program were confused on Sunday — and that was even before Trump’s declaration that states could ask the federal government to pay all or part of the $400 week payments.
On CNN’s “State of the Nation” White House economic adviser Larry Kudlow said conflicting things about whether the federal money was contingent on an additional contribution from the states. Initially Kudlow said that “for an extra $100, we will lever it up. We will pay three-quarters, and the states will pay 25 percent.”
In the same interview, though, he later said that “at a minimum, we will put in 300 bucks … but I think all they (the states) have to do is put up an extra dollar, and we will be able to throw in the extra $100.”
A clarifying statement from the White House said the “funds will be available for those who qualify by, among other things, receiving $100/week of existing assistance and certify that they have lost their jobs due to COVID-19.”
The Associated Press contributed to this story.