Lawmakers hesitant to back governor's unemployment-insurance plan
Gov. Martin O'Malley wants to give businesses a break on their skyrocketing uenmployment-benefits taxes. But -- in somewhat of an odd twist -- businesses don't seem to want the help.
That's because, as they've told lawmakers, employers fear the long-term rate increases that come with O'Malley's proposal to tap into $127 million in federal stimulus cash. They say that expanding the pool of people who can access benefits, a requirement for receiving the federal money, will cost businesses about $20 million more per year in unemployment-benefits taxes.
But, as O'Malley's aides have pointed out to lawmakers, it seems clear that expanding benefits will soon be a federal requirement anyway. Even businesses groups like the Maryland Chamber of Commerce acknowldge that. So why not go after the money now, the governor's aides argue.
Many lawmakers have told me that they feel they're in an awkward spot: They think the governor's push for the federal dollars makes sense in lots of ways, but they don't want to ignore the will of the business community ... particularly in an election year.
Sen. Thomas M. Middleton, a Democrat who heads the Senate Finance Committee, puts it this way:
"The governor is very well-intentioned on this, and I think his ideas are good and make a lot of sense," he said. "But we don't know what's best for businesses. They do. And they really don't want this."
Senator James E. DeGrange, a Democrat on the Senate's budget committee, has similar concerns. In a letter to his constituents, dated Jan. 29, he wrote:
The Governor has offered a proposal that involves a short term infusion of federal money in exchange for long term structural changes to our unemployment insurance system. The proposal would secure $127 million for short term relief, but would raise long term unemployment insurance costs by 26% for businesses. The proposed changes would cost small businesses an additional $20 million annually.
That might solve the immediate problem, but it will create serious
problems down the road. Local business owners have contacted me to
express strong opposition to this idea - and I share their concerns.
Unemployment benefits provide an important hand up to people who need
it, but raising long term costs will not solve the problem. In fact,
that would cause small businesses to lay off employees. That's the last
thing any of us want in this economy.
So what's going to happen? Middleton has had numerous meetings with O'Malley officials, business leaders and labor representatives -- in fact, I hear they're talking again tomorrow morning -- to reach some kind of compromise on the governor's proposal.
The governor's office seems committed to working something out. As Joseph Bryce, O'Malley's chief legislative officer, told me last week: "The governor's goal was to do what we can to help businesses weather through a very difficult time... As long as people are willing to keep discussing the different options, we'll keep working on it."