By Erich Wagner
House lawmakers took a step toward passing Gov. Martin O’Malley’s unemployment insurance reform package Monday, despite Republican efforts to scale back coverage and reduce taxes.
Proponents said the bill puts Maryland in line with federal guidelines, making the state eligible for $127 million in federal money. Unemployment Insurance Subcommittee Chair Herman Taylor said that if the body doesn’t act now, the federal government can require the state to enact these guidelines in the future, without the monetary reward.
“We need to take the carrot before they come back later and give us the stick,” Taylor said.
House Minority Leader Tony O’Donnell led the push against the program, offering two amendments that would have repealed expansions of benefits passed by the General Assembly last year. Another Republican sought to scale back tax rates for small business.
All of the proposed amendments failed, so the bill remains unchanged from the Senate version passed earlier this month. The bill requires one more vote on the House floor before going to the governor’s desk to be signed into law.
O’Donnell blamed the unemployment insurance trust fund’s insolvency on last year’s increased maximum benefits to unemployed workers, as well as expansion of the program to part-time workers. He and other Republicans also argued the bill and the expansions passed last year would put an undue burden on small businesses, who have to pay into the unemployment insurance trust fund each month.
“The trust fund is broken, and the surcharge to employers across the state is being increased dramatically,” O’Donnell said. “It may be hard to do away with this, but it’s in the long-term interest for the state. If you’re concerned about the solvency [of the fund], don’t put your hand out for another government bailout.”
O’Donnell pointed to the $17.5 million estimated cost from last year’s bill expanding coverage to part-time workers. Proponents said those costs haven’t materialized, and part-time workers only cost the unemployment insurance trust fund $800,000 per year.
House Economic Matters Chairman Dereck Davis said the debate was “largely academic,” and not based in the real world. He pointed out that last year’s bill only expanded benefits to unemployed workers seeking part-time instead of full-time work.
“Businesses pay for every single worker, part-time or full-time, and they’ve always paid that,” Davis said. “Part-time workers did not [cause taxes to rise]. The recession did that.”
Del. Ron George, R-Anne Arundel, tried to make the bill more palatable for businesses with 50 or fewer employees, introducing an amendment that would lower those firms’ unemployment insurance tax rates for one year.
“Big business is for this, but it’s actually more onerous for small businesses,” George said. “With this amendment, we will still be able to get the federal funds, since the change is only for 2011.”
But Davis said the bill would violate federal law, which prohibits charging any tax below the “standard established rate.”
“I would love to be able to do this, and I was looking for a way to do it,” Davis said. “But under [the Federal Unemployment Tax Act] it’s against the law.”