Jobless tax revision studied

Business groups to take a stand Monday

February 27, 2010|By Julie Bykowicz | julie.bykowicz@baltsun.com

Business groups that have opposed the governor's plan to cut unemployment-benefits taxes at a time when many employers are struggling say they will announce Monday whether they've been won over by a compromise plan.

The groups had opposed Gov. Martin O'Malley's idea to tap into about $127 million in federal stimulus money - which could have reduced employers' taxes this year - in part because it meant a slight but permanent increase in the amount they pay into the state's unemployment insurance trust fund.

For the state to get the federal money, it must extend benefits to more part-time workers and those in qualified job-training programs, by adjusting a formula so that more people would qualify for benefits. Those changes amount to an extra $20 million employers would have to pay each year.

Sen. Thomas M. Middleton, a Charles County Democrat and Finance Committee chairman who has been in the thick of near-daily negotiations, says he's confident the parties have reached a compromise that will enable the state to go after the federal money but offsets the new costs to employers.

Two large business groups, the Maryland Chamber of Commerce and the Maryland Retailers Association, say they need time to present the plan to their members. They expect to have an answer Monday on whether they'll support it.

The new plan does not include unemployment-tax rate relief. Business groups said they'd prefer to use all $127 million to build up the depleted fund.

Most of the other changes involve decreasing certain benefits, including eliminating sick claims, increasing the minimum weekly claim to $50 (which knocks off a few of the lowest-end claimants), increasing the penalties for misconduct and decreasing the amount of money an unemployed person can make while collecting benefits.

Aides to the Democratic governor helped design the compromise, and lawmakers could vote on it as soon as next week.

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