State increases employers' costs for unemployment Higher assessment for trust fund expected to raise $60 million

October 02, 1991|By Kim Clark

Maryland businesses will have to pay an extra $35 per employee per year into the state unemployment insurance trust fund, which is being rapidly depleted, the state announced yesterday.

The increase that took effect yesterday comes three months after the state doubled the average employer's unemployment insurance bill to an annual $238 per employee. Yesterday's increase was expected to earn the state $60 million a year in addition to the $200-million-a-year increase adopted in July.

The extra money is needed because Maryland is paying out twice as much for unemployment compensation as it is collecting in premiums, and a trust fund "cushion" saved for times like these is dangerously low, said Tom Wendel, who heads the trust fund.

Mr. Wendel, executive director of the unemployment insurance office of the Department of Economic and Employment Development, said that the state might pay out as much as $500 million this year in jobless benefits but expects to take in only about $205 million in premiums.

The state hopes to raise about $450 million for jobless benefits in 1992, he said.

If unemployment begins to abate next year, the state expects the trust fund to rebound by 1995, he said.

Mr. Wendel said that he did not expect the layoffs announced by the state government Monday to worsen the trust fund's status because jobless claims filed by former state workers are paid from the state's general fund.

In an audit performed Sept. 27, the state discovered the trust fund had dropped below $272 million, down from more than $500 million last year, he said.

The state had announced that if the trust fund dropped below $325 million, it would increase the premiums it charges Maryland's 113,000 employers.

As the recession lengthened, local employers realized the surcharge was becoming increasingly likely, but many were still dismayed to see it imposed.

"It is just a vicious cycle," said Gary Teegardin, owner of the Taneytown Deli in Catonsville. Mr. Teegardin said that he plans to pass on the increase for unemployment insurance for his 11 employees to his customers.

At Bethlehem Steel Corp., which has 7,800 employees at its Sparrows Point facility, company managers said that the increase would add $1.4 million to the company's annual $3.7 million state unemployment insurance cost.

Noting that the company has been losing money for months, Gary Graham, a spokesman for the Bethlehem, Pa.-based steelmaker, said, "It certainly worsens our competitiveness."

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