SB 819
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 819 (Senator Klausmeier)(Chair, Joint Committee on
Unemployment Insurance Oversight)
Finance Economic Matters
Unemployment Insurance - Weekly Benefit Amount - Income Disregard
This emergency bill increases, from $50 to $200, the wages that are disregarded for
purposes of determining an unemployment insurance (UI) claimant’s weekly benefit
amount. The bill terminates concurrent with the expiration of the state of emergency
declared by the Governor due to the COVID-19 pandemic.
Fiscal Summary
State Effect: Federal fund revenues and federal/general fund expenditures for the
Maryland Department of Labor (MDL) increase to the extent that the department requires
additional administrative funding to implement the bill in FY 2021. State expenditures
increase by an unknown amount in FY 2021 and 2022 due to increased reimbursements.
Nonbudgeted Unemployment Insurance Trust Fund (UITF) expenditures increase by an
unknown amount in FY 2021 and potentially FY 2022 for additional benefit payments.
UITF revenues increase from reimbursements in FY 2021 and 2022.
Local Effect: Local expenditures increase by an unknown amount in FY 2021 and 2022
due to increased reimbursements. Revenues are not affected.
Small Business Effect: Minimal, although small nonprofits are affected, as discussed
below.
Analysis
Current Law: Generally, an eligible claimant must be paid a weekly benefit amount that
is computed by:
 determining the claimant’s weekly benefit amount based on qualifying income;
 adding any allowance for a dependent to which the claimant is entitled; and
 subtracting any wages exceeding $50 payable to the claimant for the week.
Chapter 2 of 2010 reduced the income disregard from $100 to $50 as part of several
modifications to the State’s UI law affecting program eligibility.
For more information on the State’s UI program, see the Appendix – Unemployment
Insurance.
State Fiscal Effect:
Administrative Costs
MDL indicates administrative costs of approximately $120,000 are necessary to implement
the bill (information technology and mailings). If existing federal administrative funds are
insufficient to cover such expenses, additional above-base federal funding will be provided,
assuming that the expenses are allowable, in fiscal 2021. Otherwise, general funds are
needed to cover those costs.
Unemployment Insurance Trust Fund
Nonbudgeted UITF expenditures increase by an unknown amount in fiscal 2021 and
potentially in fiscal 2022 as claimants are eligible to receive up to $150 more each week
due to the income disregard. While the total amount is unknown, based on previous MDL
estimates for a $300 income disregard, had this provision been in effect in 2020, UITF
would have paid out approximately $30 million more (UITF paid out $1.8 billion in 2020).
Based on that information and recent claims history, an additional $300,000 to $420,000
in benefit payments each week through the duration of the bill could be expected –
specifically, $7.8 million to $10.9 million in total if the bill were in effect for six months.
Under Chapter 39 of 2021 and a related executive order, employer pandemic experience
does not increase employer taxes through the duration of the COVID-19 pandemic.
Therefore, UITF revenues increase only from reimbursements in fiscal 2021 and 2022.
In light of Chapter 73 of 2021 and the anticipated $1.1 billion infusion of federal funds into
UITF, there should be no other effect. Absent that legislation, the bill’s enhanced benefit
payments would likely represent an increase in net borrowing, which would need to be
repaid, potentially with interest, depending on the extent and duration.
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State as an Employer
The State, as an employer, reimburses UITF dollar for dollar for UI benefits paid to former
employees. As the bill increases the weekly amount that may be paid out, State
expenditures for reimbursements increase in fiscal 2021 and 2022.
Local Expenditures: Local governments reimburse UITF in the same manner as the State
government and are affected in the same way as described above.
Small Business Effect: Under Chapter 39 of 2021 and a related executive order, employer
pandemic experience does not increase employer taxes through the duration of the
COVID-19 pandemic. As such, the bill does not affect small (for-profit) businesses beyond
the employment incentives discussed below. However, while not considered a small
business for purposes of fiscal and policy notes, small nonprofits are affected, as they
reimburse UITF for benefits paid to former employees – normally dollar for dollar, but
under federal stimulus legislation reimbursers have received a 50% or 75% credit during
the COVID-19 pandemic, and they are currently receiving a 75% credit through early
September 2021. Chapter 39 also allows small employers to defer payments to UITF until
January 31, 2022.
Under the bill, weekly UI benefit payments increase by as much as $150 for some
individuals. Whether these increased weekly payments increase the total amount of
benefits paid to a particular former employee depends on whether the duration of the
benefits changes due to the changing employment incentives. The bill incentivizes
part-time work while an individual is receiving UI benefits, which may lead to a quicker
transition to full-time employment and the cessation of UI benefits. However, the enhanced
income disregard may be a disincentive to seek full-time work, which may extend the
duration of UI benefits.
The effect is reversed for employers seeking to hire new employees: they benefit from an
increased incentive for individuals to seek out part-time work, and a potential disincentive
for individuals to seek out full-time work.
Additional Information
Prior Introductions: None.
Designated Cross File: HB 1139 (Delegate Carey) - Economic Matters.
Information Source(s): Maryland Department of Labor; Comptroller’s Office;
Department of Legislative Services
SB 819/ Page 3
Fiscal Note History: First Reader - February 23, 2021
rh/ljm Third Reader - March 24, 2021
Revised - Amendment(s) - March 24, 2021
Revised - Updated Information - March 24, 2021
Revised - Updated Information - June 1, 2021
Analysis by: Stephen M. Ross Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 819/ Page 4
 Appendix – Unemployment Insurance
Program Overview
Unemployment Insurance (UI) provides temporary, partial wage replacement benefits of
up to $430 per week to individuals who are unemployed through no fault of their own and
who are willing to work, able to work, and actively seeking employment. Both the federal
and state governments have responsibilities for UI programs. Generally, funding for the
program is provided by employers through UI taxes paid to both the federal government
for administrative and other expenses and to the states for deposit in their UI trust funds.
Using federal tax revenues, the UI program is administered pursuant to state law by state
employees. The Maryland Department of Labor’s Division of Unemployment Insurance
administers the State’s UI program.
Each state law prescribes the tax structure, qualifying requirements, benefit levels, and
disqualification provisions. These laws must, however, conform to broad federal
guidelines.
Employer Contributions
Most Maryland employers pay State UI taxes, although State and local governments and
some nonprofit organizations reimburse the Unemployment Insurance Trust Fund (UITF)
for claims paid in lieu of paying taxes. Therefore, for most Maryland employers, the State
UI tax rate is a function of:
 the employer’s specific unemployment claims history; and
 the applicable tax table, which is based on the State’s UITF balance and applies to
most taxable employers.
Exhibit 1 shows the range of State UI taxes a typical employer owes based on the tax table
in effect; there are other rates for new employers and in other limited circumstances. State
UI taxes and reimbursements are typically due quarterly; however, Chapter 39 of 2021
allows employers with fewer than 50 employees to defer 2021 State UI tax payments or
reimbursements until January 31, 2022, and authorizes the Secretary of Labor to offer a
similar deferment in 2022. The Act, in conjunction with a recent executive order, also
generally prevents UI claims made during the COVID-19 pandemic from increasing an
employer’s taxes – although Table F, with its broadly higher rates, is in effect in 2021.
SB 819/ Page 5
 Exhibit 1
Tax Tables and Applicable Employer Tax Rates
As of Sept. 30, if the
Trust Fund Balance, Trust Fund
As a Percentage of Balance Then Next Year’s Tax Annual Tax Per Employee
Taxable Wages ($ in Millions) Rates Range from… (Rate x $8,500)
Tax No Single No Single
Table Exceeds Up to Exceeds Up to Claims Claim Up to Claims Claim Up to
A 5.00% N/A $995.8 N/A 0.30% 0.60% 7.50% $25.50 $51.00 $637.50
B 4.50% 5.00% 896.2 $995.8 0.60% 0.90% 9.00% 51.00 76.50 765.00
C 4.00% 4.50% 796.6 896.2 1.00% 1.50% 10.50% 85.00 127.50 892.50
D 3.50% 4.00% 697.1 796.6 1.40% 2.10% 11.80% 119.00 178.50 1,003.00
E 3.00% 3.50% 597.5 697.1 1.80% 2.60% 12.90% 153.00 221.00 1,096.50
F 0.00% 3.00% 0.0 597.5 2.20% 3.10% 13.50% 187.00 263.50 1,147.50
Notes: Fund balance threshold dollar amounts are based on the 2020 taxable wage base and are subject to change
each year. A “single claim” represents the tax rate applicable to the lowest possible rate associated with nonzero
(.0001 to .0027) benefit ratios. Taxes are applied to the first $8,500 earned by each employee, each year; compensation
less than that amount reduces taxes owed accordingly. Table F is in effect in 2021; Table A had been in effect since
2016.
Source: Department of Legislative Services
Benefit Payments
Generally, the weekly benefit amount a claimant is eligible for is based on the quarterly
wages that the claimant was paid for covered employment in the calendar quarter of the
claimant’s base period in which those wages were highest. The base period is the first four
of the last five completed calendar quarters immediately preceding the start of the benefit
year, or, if the individual does not qualify under that definition, the four most recently
completed calendar quarters immediately preceding the start of the benefit year.
Weekly benefit amounts range from $50 to $430 per week, based on earnings in the base
period. There is also a dependent allowance of $8 per dependent, for up to five dependents,
although the allowance cannot raise the weekly benefit amount above $430. The first $50
of any wages earned by an individual receiving UI benefits in a given week is disregarded
for purposes of calculating the weekly benefit amount, after which the benefit payment is
reduced dollar for dollar. These amounts do not adjust for inflation. Generally, during a
benefit year, a claimant is entitled to 26 times the claimant’s weekly benefit amount.
During periods of high unemployment, extended benefits may also be available.
SB 819/ Page 6


Statutes affected:
Text - First - Unemployment Insurance - Weekly Benefit Amount - Income Disregard: 8-803 Labor and Employment
Text - Third - Unemployment Insurance - Weekly Benefit Amount - Income Disregard: 8-803 Labor and Employment