February 28, 1995
The General Assembly should reward both business and unemployed workers for the improved state economy by changing the state unemployment insurance rates and benefits -- as long as the needed buildup in the trust fund's reserves is not jeopardized.
But both houses must agree on the plan today, before the new quarterly tax bills are sent to employers. If there's no accord between the Senate Finance Committee and the House Economic Matters Committee, the business surtax remains at a stiff 1.7 percent and jobless worker benefits remain frozen at 1991 levels of $223 weekly.
We urge the two bodies to quickly agree on a nominal compromise close to the Senate version of a 1.2 percent tax rate and a $250 weekly benefit as the most prudent course for state business and for the unemployment insurance fund, which stands at $400 million against a goal of $658 million that was legislated three years ago.
There's no magic number that will work for all economic developments, but the unending roller-coaster ride of rates and benefits in the 1980s should be a lasting lesson for legislators. Yes, unemployment is at a five-year low, but that can swiftly change. Businesses hate the uncertainty of undulating rates, of cuts one year and emergency surcharges the next. It hampers business planning, and it can deter prospective employers from choosing to locate in this state.
Gov. Parris Glendening supports the idea of a surtax cut and a benefits rise to reinforce his administration's pro-business message and to promote Maryland's economic development prospects. He would benefit from either version of the legislation, but it will be a clear setback to his program if no action is taken and the rate-benefit system remains unchanged for another year.
A conservative approach to reducing the tax rate, a sensible increase in benefits, with a one-year sunset provision that would force the General Assembly to seriously review the fund structure in summer study this year, would best serve the interests of the state and its economy. Cutting the rate to 1.15 percent and adopting the House's $265 weekly benefit would give each side a claim to political compromise, while preserving the integrity and stability of this important trust fund.
