The pool of money that pays for Maryland unemployment benefits, the Unemployment Insurance Trust Fund, is running out of money. As a result, Maryland businesses could be forced to pay more into the fund.
State Labor Secretary Tiffany Robinson told a group of lawmakers and community leaders on Thursday that, after paying a “record number of applicants,” the fund has about $615 million left — a little more than the benefits paid out since March 9.
In the best-case scenario, the state plans to borrow $1.2 billion from the U.S. Department of Labor at the end of August. In the worst-case scenario, the state will borrow nearly $1.9 billion dollars in about two weeks.
Due to the CARES Act, that loan will be interest-free through the end of 2020, Robinson said, but it will start to accrue interest in January.
State Sen. Steve Hershey, a Republican from the Eastern Shore, expressed disappointment that a loan isn’t enough — that without a federal grant, Maryland businesses will owe higher unemployment taxes.
“If the federal government doesn’t help us out, the burden falls completely onto the businesses that for all intents and purposes, it wasn’t their decision to have to shut down businesses,” Hershey said.
He suggested the legislature consider ways to alleviate the burden on businesses.
Robinson said she has asked the federal government for a grant or to delay interest charges on a loan until October 2021.
Maryland’s unemployment system has been flooded with claims since Gov. Larry Hogan ordered non-essential businesses to close in March. Even after businesses began to reopen, many workers have still not returned to their jobs. Last week, the state received more than 66,000 new unemployment claims.
“During this pandemic we've seen over a 5,000% increase in the need for unemployment services,” Robinson said. “The Department of Labor, and specifically our Division of Unemployment Insurance, has processed more new claims in the past three months than we did in the past three years combined.”
Thousands of Maryland residents have complained about technical glitches and about not being able to get calls through to the state workers processing unemployment claims.
Robinson said Thursday that at this point, her staff has processed about 96% of claims. That leaves about 23,000 people still waiting to hear whether they qualify for benefits.
But Robinson said that’s to be expected — these are insurance claims, after all.
“I love the way that my team uses the analogy of a car insurance program. If there is an accident, there's paperwork that has to go back and forth, there is a claim that has to be filed, they have to get a statement from both sides,” she said. “Benefits or a settlement is not automatically paid. There is a process.”
Sen. Kathy Klausmeier, a Baltimore County Democrat, asked Robinson whether the state is prepared for a new surge in COVID-19 cases that forces businesses to close back up and puts more residents out of work. Robinson said the department has hired more than 100 new workers and automated some of the processes that were causing delays before.
By the fall, Robinson said, they will be ready for whatever comes.
