January 27, 2010

Analysis: Senate committee a big unemployment hurdle

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Gov. Martin O’Malley’s unemployment insurance proposal faces problems in the Senate Finance Committee, which would have to pass the controversial bill before it comes before the full Senate.

Chairman Thomas Mac Middleton, a Charles County Democrat, said he’s trying to find a way to pass the legislation, but one of its key components remains in play. The “alternative base period,” which would use an employee’s most recent payroll data to calculate benefits, has inflamed business groups who say it would raise costs.

The state would have to pass the change in order to get $127 million in federal assistance for Maryland’s shrinking benefits trust fund. O’Malley administration officials said they can use the money to lower taxes, but businesses argue that the change will cost more than that in the long run, and they don’t mind paying more now to avoid the shift. The changes are expected to cost around $20 million per year.

Middleton said business groups “made a very, very eye opening observation,” during a bill hearing Tuesday, pointing out that they are the ones paying the state unemployment tax.

“I think you have to listen to what they said,” he added. “If they don’t think it helps them, why are we doing it?”

Middleton said passage may require negotiators to put other things on the table, such as a week-long waiting period before a worker is eligible for benefits. Labor advocates fiercely oppose that idea proposed by the Maryland Chamber of Commerce.

The chamber’s position calls for several moves that the organization believes would save the unemployment fund money, including an elimination of the money unemployed workers get per dependent. It also would end the use of unemployment to pay for sick leave.

Jason Perkins-Cohen, executive director of the Job Opportunities Task Force, which supports the unemployment overhaul, said he will not be able to make a deal that gets the chamber everything it wants.

“I would turn on the bill in a heartbeat, and do everything I can to fight against it,” he said.

Perkins-Cohen pointed out that the federal cash will last for six years, and the state can make changes later if the fund remains depleted.

“We’ll be meeting every year, and if they’re right, then yes, they’d have to do something,” he said. “But with the federal money on the table, there’s no need to do something in 2010 to hurt workers.”

Middleton said he would look at shortening the state’s 26-week benefits period, but could balance that with a benefit increase. Middleton said he’s committed to passing something that helps businesses smooth out their unemployment costs.

Legislative leaders at one point thought they could pass the changes within the first week of the session, but too many problems remain to be solved.

The House Economic Matters Committee hears the bill Thursday.