Unemployment insurance plan would hurt businesses

December 23, 2009

Stabilizing Maryland's unemployment system is crucial to the state's economy and business community. The Maryland Chamber of Commerce appreciates the O'Malley administration's focus on this important issue. While the administration's proposal has some merit, the Maryland Chamber disagrees with The Sun's recent editorial ("Expanding benefits is worth the price," Dec. 21).

Deferring more than $80 million in unemployment insurance tax increases and expanding benefits to access $126.8 million from the federal government sounds appealing. But in the long run, this proposal would weaken the current system, socialize costs and ultimately ensure that Maryland employers pay higher, more inequitable rates for a longer period of time.

The administration's proposal to develop payment plan agreements with employers makes a lot of sense. Because of how rates are calculated, employers pay the majority of taxes in the first quarter. This plan will allow them to spread their payments over time, while still collecting funds needed to replenish the trust fund faster. The Department of Labor, Licensing and Regulation can do this without legislation.

The proposed reduction of the monthly interest rate from 1.5 percent to 1 percent - a change in the annualized rate from 18 percent to 12 percent - is also a step in the right direction. However, the Maryland Chamber encourages the state to drop the rate to 0.5 percent - a more reasonable annualized rate of only 6 percent.

A short-term fix that adds permanent, long-term costs is not the solution that we need. There are a lot of moving parts to this debate. We should proceed with caution, keeping the long-term consequences of our actions in mind. Creating and retaining jobs will help us resolve this problem. We are committed to working with the governor and General Assembly to ensure that happens.Kathy Snyder, Annapolis

The writer is president and chief executive officer of the Maryland Chamber of Commerce.

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