Governor Martin O'Malley today joined Department of Labor, Licensing and Regulation Secretary Leonard J. Howie III and Maryland Chamber of Commerce President and CEO Kathy Snyder to announce that Maryland's economic recovery has once again driven down unemployment insurance tax rates for Maryland employers. Beginning January 1, 2014, most Maryland businesses will pay lower unemployment insurance taxes. Unemployment Insurance is a critical lifeline for working Marylanders during tough economic times. Improving the unemployment insurance trust fund has been a priority for the O'Malley-Brown Administration.
"Progress doesn't happen by chance, but by the choices we're making together to build a strong, growing and resilient economy," said Governor Martin O'Malley. "As a result of our efforts together with Maryland employers to recover the jobs lost during the recession, Maryland businesses will see a significant cut in their unemployment insurance rate -- many as much as 70 percent."
Under state law, the tax rates are determined each year based upon the health of the Trust Fund on September 30. The health of the trust fund is connected to the health of the economy -- as the economy improves, so too does the health of the trust fund. As the health of the trust fund improves, tax rates for Maryland employers fall.
At $934,896,062, Maryland has the eighth highest trust fund balance in the country. Weekly benefit payouts have declined steadily since peaking in 2009, and the balance in the trust fund is healthy enough to trigger a key rate change for 2014. Reflecting the recovery of the fund, the range of unemployment insurance rates that employers will pay in 2014 will be significantly lower than the rates in the prior four years.
In 2012, Table F was in effect with a range of tax rates of 2.2 percent to 13.5 percent of the first $8,500 in annual wages. For calendar year 2013, Table C was in effect with range of rates of 1.0 percent to 10.5 percent of the first $8,500 in annual wages. For 2014 Table A -- the lowest range of tax rates -- will be in effect, with a range of rates of .3 percent to 7.5 percent on the first 8,500 in annual wages. Many businesses will realize an 86 percent reduction in their UI cost per employee over the last two years.
While individual rates in 2014 will vary from business to business, today's announcement means that many of Maryland's businesses will receive a significant tax cut. For example, while an employer at the lowest end of the tax rates paid $85 per employee in 2013, the company will now be paying less than half this much -- $25.50 -- in 2014.
"By working together when times are tight, we're now seeing significantly reduced unemployment insurance taxes for Maryland's employers, adding further fuel to our economic recovery," said Secretary Howie. "Thanks to the leadership of Governor O'Malley and the work of our partners in the General Assembly, and the hard work and fortitude of Maryland businesses, we are far ahead of most states in this area," said Secretary Howie, noting that 15 other states have loans from the U.S. Government to pay unemployment insurance benefits.
David McGlone, Acting Assistant Secretary for the Division of Unemployment Insurance, attributes the tax rate reduction to cooperative planning in the State. "Through Maryland's Unemployment Insurance Oversight Committee, we work together to have a strong system for all Marylanders. Today's announcement shows that the rate structure system works as intended."
When unemployment claims increased during the national recession, Governor O'Malley introduced legislation to strengthen Maryland's unemployment insurance program, and worked with the Division of Unemployment Insurance on a new program to offer payment plans for employers. Over the last four years, Maryland employers have implemented 3,582 payment plans with DLLR. These plans work to the benefit of employers and claimants alike by keeping wage records current and a consistent revenue stream for the UI Trust Fund.
"The reduction in unemployment insurance tax rates is good news for Maryland employers, workers and the economy," said Kathy Snyder, CCE, President/CEO, Maryland Chamber of Commerce. Working together through the Unemployment Insurance Oversight Committee, business, labor and elected leaders have strengthened Maryland's unemployment insurance system."
"Lower tax liabilities will have positive consequences for Maryland's employers, workers, and the economy. They are the direct result of the prudent decisions made by Maryland business leaders, labor, the legislature, and the O'Malley Administration. Maryland is well-positioned to seize new economic opportunities," said Ronald Adler, President-CEO of Laurdan Associates, Inc., Chair of the Maryland Chamber of Commerce UI Subcommittee and member of the UI Oversight Committee.
The U.S. Chamber of Commerce has ranked Maryland #1 for entrepreneurship and innovation two years in a row. The Milken Institute ranks our State #1 in research and development per capita, and #2 for science and technology assets. The nonpartisan group The States Project says we're #2 for economic opportunity, and the Information Technology and Innovation Foundation ranks us among the five states best positioned to succeed in the new economy. And for the fourth year in a row- the Chamber also ranks us in the top ten for economic performance. Last year, entrepreneurial Marylanders made our State 4th in the nation for startups per capita according to a study by Fast Company.