Maryland Department of Labor Implores Lawmakers to Hold Off on UI Tax Changes During ‘Tenuous Economic Time’

Maryland Department of Labor Implores Lawmakers to Hold Off on UI Tax Changes During ‘Tenuous Economic Time’
Maryland Labor Secretary Tiffany Robinson and Commerce Secretary Kelly Schulz attend a news conference with Governor Larry Hogan in front of the Maryland State House in Annapolis, Md., on April 17, 2020. (Chip Somodevilla/Getty Images)
The Center Square

With short-term solvency and an ongoing pandemic in play, the head of Maryland’s Department of Labor recommended lawmakers not make any tax policy changes to the state’s unemployment insurance (UI) system for at least another year.

Labor Secretary Tiffany Robinson went before the state Joint Unemployment Insurance Oversight Committee on Jan. 6 and discussed a range of issues about the system, which has been used extensively since the pandemic first emerged nearly two years ago.

With the UI Trust’s solvency projected through at least 2025 under current protocol, Robinson told panelists, “MDL does not endorse or recommend a higher tax burden on the Maryland employer community at this tenuous economic time.”

Pointing to worker shortages and ongoing uncertainty as new variants of COVID-19 emerge, Robinson said, “We need [employers] to emerge strong before we add any new burden.”

At the committee meeting, which served as an opportunity for lawmakers to receive updates on the UI system and current claims practices, Robinson also touched on fraud. It remains a concern, she said, though new safeguards have been put in place.

“We had hoped the fraud would be reduced significantly with the end of the federal programs,” Robinson said. “It is reduced, only because the number of claims we are receiving is reduced. However, these fraudsters have decided it’s still worthwhile to find ways to attack our system.”

State Delegate Ned Carey (D-Anne Arundel County) said he and other lawmakers still field concerns from constituents about challenges navigating the state’s UI system.

“We continue to get calls from people who have fallen into the black hole,” Carey said. “What we continue to hear is they just can’t get in touch with somebody.”

Robinson said more than 99 percent of the claims that have come in since the pandemic’s onset have been processed.

“We are answering every call,” Robinson said. “The only day that we’re having a little bit of trouble is on Mondays, which is our highest weekly certification day, and that makes sense. But we’re getting there. We’re making progress.”

The committee also heard a report from consultants at the W.E. Upjohn Institute for Employment Research on next steps in assessing the short- and long-term condition of the UI Trust.

“The Maryland system is really close to being an ideal system,” Christopher O’Leary, a senior economist with the institute, said in reference to comparing it to other UI systems in the country. “It could be, with some minor changes, improved.”

O’Leary touched on several issues of consideration for Maryland lawmakers, including the potential of assessing a tax on individual wage earners—a method used in some states—to help replenish the UI Trust alongside the existing employer contributions.

“(Workers) would get more say in the system, and employers would recognize that workers are shouldering part of the burden directly,” O’Leary said. “There may be more harmony in improving policy going forward. But that’s a political question. I’m just giving you something to ponder.”

The scenario, O’Leary said, could yield $60 million to $70 million in revenue annually for the trust.

While fraud has cropped up, O’Leary said Maryland does have a number of integrity systems in place to weed out people acting unlawfully to game the system. Long term, he recommended additional methods, including face-to-face validation.

State Sen. Katherine Klausmeier (D-Baltimore County) who also co-chairs the committee, said further discussion of the UI system will continue within the committee as 2022 gets underway.

“It’s been a very popular topic over the last, unfortunately, two years,” Klausmeier said. “It’s the gift that just keeps on giving with COVID and all of the other things that have gone along with it.”

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