Maryland business groups dismayed by Gov. Martin O'Malley's proposal to expand unemployment benefits, which could cost companies an estimated $20 million a year, are negotiating ways to offset the expense.
O'Malley said last month that he wants the state to broaden the qualifying period for benefits so that the state can access about $127 million in federal money to prop up its quickly shrinking unemployment insurance fund. The change requires legislation.
Business groups have balked at O'Malley's proposal to implement what's called the "alternative base period," which increases the period of time that is examined when determining whether someone is eligible for unemployment benefits.
Calling it a short-term solution with long-term costs, they have asked the Democratic governor to consider changing other unemployment benefits that would save companies money.
Suggestions include altering the way unemployment benefits are calculated so that longer-term employees receive more money and shorter-term employees get less, instituting a one-week wait period for payment of benefits, decreasing dependent allowances, eliminating sick claims and prohibiting striking workers from collecting benefits.
Tom Saquella, president of the Maryland Retailers Association, said discussions with the governor continue but "not a lot of progress has been made."
"He thinks he's helping businesses, but we wish he would have talked to us earlier," Saquella said of O'Malley. Next week, a Senate committee will hold a hearing on the alternative base period proposal. At a Senate briefing Tuesday on the unemployment insurance fund, lawmakers appeared to favor it.
Sen. Thomas M. Middleton, a Democrat who is chairman of the Finance Committee, was among those who said they believe the federal government will soon require states to use the alternative base period, something a majority of states already do.
Aides to the governor have said they want to make the change now so that they can access the $127 million in federal incentive money. Officials plan to deposit more than $80 million of it directly into the unemployment insurance fund, which has dwindled so much that the state will need to borrow federal money to keep it solvent.
Julie Squire, assistant labor secretary for the unemployment insurance fund, said the claim volume in recent months "is really unprecedented." Claims last year -- about 400,000 new ones -- were almost double what they were in 2007, she said.
Labor Department officials already have started telling employers that they can spread out their unemployment insurance payment, typically made in April, over several months.
Because the unemployment insurance fund is so low, employers have been bracing for a large increase in their payments this year, about $136 to $383 more per worker than they do now. The federal money will help lower that amount, but not much -- about $34 to $51 per worker, by some estimates.