Locals and Nonprofits: Avoid “Raw Deal” on Unemployment

MACo signed onto a joint letter addressed to Governor Larry Hogan, Lieutenant Governor Boyd Rutherford, and Secretary of Labor Tiffany Robinson requesting necessary relief for COVID-19 related unemployment benefit charges.

Under current law, local governments and many nonprofits may elect to categorized as “reimbursing employers” for unemployment costs rather than pay the unemployment insurance contribution tax-rate. As the local government workforce is relatively stable, the option of “self-insuring” provides counties savings in the long run.

Unlike other employers, for whom costs of unemployment liabilities will be delayed until April 2021 when adjusted tax rates will start to phase-in the cost of unemployment liabilities created by COVID-19, local governments and nonprofits are expected to pay these fees now, without delay.

In late April, Maryland State Senator Cheryl Kagan sent a letter urging equitable treatment on behalf of nonprofits and local governments with regard to unemployment insurance. Today, MACo, MML, and Maryland Nonprofits followed up with a joint letter calling for executive action to grant ‘reimbursing’ employers necessary relief from pending charges for COVID-19 related unemployment benefits.

From the joint letter:

Local governments in Maryland will be adversely affected by impending costs for lost employees as well. If and when local governments are forced to lay off employees, the fiscal impact of immediate reimbursement of U/I payments will exacerbate their already difficult budgetary situation. Most local governments are in the process of finalizing their FY 21 budgets and are already planning for increases in spending and decreases in revenue due to the effects of the pandemic. Immediate reimbursement of U/I payments would cause even deeper fiscal strain on county and municipal budgets. Assistance from the State in the form of deferred liability of these repayments would ease a portion of their budget crunch.

Read the full letter here.

Previous Conduit Street Coverage: Kagan Urges Equitable Treatment for Local Govts/Nonprofits Amid Pandemic

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