The Department of Labor, Licensing and Regulation stated this past October that the spiraling unemployment will triple the cost of unemployment insurance taxes for business in 2010.

The recession's jobless toll is draining unemployment compensation funds in Maryland and around the nation. The Maryland Unemployment Trust Fund, drained by the state's worst unemployment rate in 26 years, has dropped from $900 million to $200 million today. The state has had to pay $24 million in weekly benefits, twice as much as usual. At that rate, the Fund won't receive enough new money to keep it solvent until tax returns are filed in April.(When the fund goes insolvent, Federal law requires that the Federal government loan the fund money so that UI benefits will continue. The state must refund the money.)

State unemployment compensation funds are separate from the general state budget, so when there is a fund shortfall, only two solutions are typically considered - either reduce benefits or raise the payroll tax on employers. Maryland has opted for the latter. The Maryland unemployment insurance tax will for employers is scheduled to increase by 267% per employee. The tax on the average employee will increase from $51 per employee to $181.

To make matters worse, the Governor has come up with a plan to make a bad situation worse. It all hinges on getting $127 million in federal stimulus funding. Of course, the fed dollars come with strings attached.

In order to get the money, Maryland employers would be required to report employees' unemployment eligibility in a way designed to increase the number of individuals eligible for unemployment insurance benefits. And the state would have to double to a full year unemployment insurance for unemployed Marylanders who are enrolled in training programs and provide additional unemployment benefits to some part-time workers (this measure was enacted last Session). As if that's not bad enough, these changes will cost an extra $20 million annually.

Business is nearly unanimous in rejecting O'Malley's plan. I don't blame them. The plan represents the worst type of expediency in government policy. For $127 million of short-term relief, the State must adopt a permanent and more expensive expansion its unemployment system. The cost of the permanent, more expensive expansion of the system will be borne by business owners, making Maryland's rough treatment of business nearly legendary (Forbes Magazine has rated Maryland eighth from the bottom of the fifty states in regard to business climate.)

I will do all I can to defeat this proposal.

Write comment
Name:
Email:	do not notifynotify
Website:
Title:
UBBCode:	[b]   [i]   [u]   [url]   [quote]   [code]   [img]   -color-aquablackbluefuchsiagraygreenlimemaroonnavyolivepurpleredsilvertealwhiteyellow -size-tinysmallmediumlargehuge
Security Image
Please input the anti-spam code that you can read in the image.

!joomlacomment 4.0 Copyright (C) 2009 Compojoom.com . All rights reserved."