January 18, 2010

Unemployment change might take longer than expected

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By Andy Rosen
Andy@MarylandReporter.com

The unemployment insurance reforms that Gov. Martin O’Malley has proposed to the General Assembly might take longer than some expected.

The bills were introduced last week. O’Malley has been touting them for several weeks as crucial to his administration’s strategy for job growth, and has specifically highlighted an associated federal program to help with rising unemployment taxes.

But the program has split the General Assembly’s Joint Committee on Unemployment Insurance Oversight, comprised of business officials, labor advocates and lawmakers. Though labor groups are supporting the bill, it has raised the ire of groups such as the Chamber of Commerce.

After the House version of the unemployment bill was introduced on Friday, Del. Herman Taylor, D-Montgomery, the co-chair of the committee, said he believes it will take some time to work out the differences on the panel.

“I like the governor’s proposal, but I think what the committee is trying to do is bring out bipartisan bills,” he said.

Legislative leaders said after the proposals were unveiled that some of the changes could be complete within the first week. That looks unlikely, though lawmakers say they’ll be looking at the bills soon.

Though there is no requirement that the oversight group sign off on the changes (the bill has been assigned to the House Economic Matters Committee and the Senate Finance Committee), the blessing of the oversight committee usually precedes the passage of unemployment bills.

At a briefing on O’Malley’s plans last month, members of the committee showed sharp divisions on the proposals.

O’Malley aides argued that the plans would make the state eligible for nearly $127 million in federal stimulus dollars that depend on the passage of reform. They pledged $83 million of that to help businesses that have been hit with rising costs as unemployment has grown. The high jobless rate, though 3 points below the national average, has depleted the state’s unemployment fund and triggered tax increases.

This year, businesses will see the minimum unemployment tax rate more than triple, from $51 to $187 per employee. The maximum rate will jump from $765 to $1,148.

But some on the committee argued that the reforms would ultimately cost more in the long run than the amount the state would get from the federal government. One of the most controversial measures involves changing the the way that benefits are calculated.

Complying with one of the strings attached to the federal dollars, O’Malley’s plan would use a worker’s most recent wage period to calculate unemployment benefits. Benefits now are generally calculated by looking at the first four of the past five quarters. Business groups believe that change will increase the cost of unemployment benefits and lead to tax hikes.

The Senate Finance Committee is due to discuss unemployment issues at a hearing Tuesday. Members said Friday that they hoped to begin working on the specific bills soon, but had not set a time.

“Because it’s emergency legislation we’re are going to be looking at it very soon,” said Senate Minority Leader Allan Kittleman, D-Howard and Carroll, who sits on the Finance Committee.