SB 811
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader - Revised
Senate Bill 811 (Senator Hershey, et al.)
Finance Economic Matters
Unemployment Insurance – Computation of Earned Rate of Contribution –
Applicable Table of Rates
This emergency bill requires the Governor, based on the availability of qualified federal
funds and notwithstanding any other provision of law, for fiscal 2022, to include in the
annual budget bill an appropriation of funds toward replenishment of the Unemployment
Insurance Trust Fund (UITF) in an amount sufficient to result in Table C applying in
calendar 2022. The appropriation may be used for administrative costs, including the
repayment of federal funds. Additionally, notwithstanding any other law, the bill requires
Table C to apply in calendar 2023. The bill terminates December 31, 2023.
Fiscal Summary
State Effect: The Maryland Department of Labor (MDL) can handle the bill’s
requirements with existing budgeted resources and/or other available federal funds. Federal
funds totaling $1.1 billion are allocated to UITF instead of other eligible purposes in
FY 2022 due to the transfer specified in the bill. Nonbudgeted UITF revenues increase
correspondingly. However, nonbudgeted UITF revenues also decrease by about
$700 million in total from mid-FY 2022 through mid-FY 2024 due to the bill’s direct tax
table changes in calendar 2022 and 2023, and likely further decrease from mid-FY 2024
through mid-FY 2025 due to the interaction with a State requirement to meet federal
solvency goals, as discussed below. General fund expenditures for interest payments
potentially decrease in FY 2022 and/or 2023. Nonbudgeted UITF expenditures are affected
only to the extent that available funds affect the amount and timing of UITF loan
repayments and are used for other administrative costs.
Local Effect: None. Local governments reimburse UITF dollar for dollar and are
unaffected by rate table changes.
Small Business Effect: Meaningful.
 Analysis
Current Law: Use of Table C generally requires about $800 million to $900 million in
UITF balance as of September 30 of the prior calendar year. For a discussion of employer
taxes under various rate tables, including the estimated fund balances required to move to
each table, please see the Appendix – Unemployment Insurance.
State Fiscal Effect:
Administration Intends to Allocate $1.1 Billion in Federal Stimulus Funds to UITF
At a joint press conference with the President of the Senate and the Speaker of the House,
on March 31, 2021, the Governor announced that $1.1 billion in federal funds available to
the State under the American Rescue Plan Act of 2021 (ARPA) would be allocated for
Maryland’s UITF. MDL estimates revenue from Table F contributions in calendar 2021 at
approximately $863 million, after adjusting for the provision in Chapter 39 of 2021 (“The
RELIEF Act”) that allows for the noncharging of pandemic claims. With the infusion of
$1.1 billion in ARPA federal funds, MDL estimates that the department will be able to pay
off its loan, resulting in a year-end balance of approximately $894 million, and trigger use
of Table C for calendar 2022.
Assuming the Governor provides the funding as specified, federal funds totaling
$1.1 billion are allocated to UITF instead of other eligible purposes in fiscal 2022.
Unemployment Insurance Trust Fund – Revenues
Under current law, the State is in Table F in calendar 2021, and will be in Table F in
calendar 2022 and likely in calendar 2023. Assuming the Governor provides the funding
as specified (the Governor has announced an amount of $1.1 billion), the bill moves the
State to Table C in calendar 2022 and 2023 instead. The effect on UITF for the duration of
the bill is a function of the following:
 federal funds appropriated to UITF in fiscal 2022 under the bill ($1.1 billion); and
 UITF revenue reductions in calendar 2022 and 2023 due to Table C being in effect
instead of Table F (about $350 million each year, although there is significant
uncertainty).
Under those estimates, UITF will be in an approximately $400 million better position at
the end of calendar 2023 than it would have been absent the bill.
Even though the bill terminates December 31, 2023, the move to Table C in calendar 2023
likely also affects future tax table determinations – particularly, the calendar 2024 tax table.
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Under current State law, there are two fund balance requirements, with different
determination dates, as shown below. The State cannot move to a tax table with lower rates
unless both fund balance requirements are met. In practical terms, the federal funding goal
is, at a minimum, $1.5 billion, and is likely to be more than that amount once calendar 2020
benefit payments are incorporated into the goal. Table A otherwise applies at about
$1.0 billion. To be clear, under current law, the State is in Table F in calendar 2021,
and will remain in Table F until the federal solvency funding goal is met and the State
moves to Table A; there will be no intermediary tables along the way.
2022 Table 2023 Table 2024 Table 2025 Table 2026 Table
General State Date 9/30/21 9/30/22 9/30/23 9/30/24 9/30/25
Federal Solvency Goal Date 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24
For the calendar 2024 tax table determination, unless UITF has a fund balance sufficient
to meet the federal solvency goal as of December 31, 2022, the calendar 2023 tax table will
continue to be the table with the lowest range of rates allowable. Under the bill, that is
Table C; without the bill, that is almost certainly Table F. That calculation will continue
each year until the federal funding goal is met and the State moves to Table A – likely no
earlier than calendar 2025 under either current law or the bill.
The Department of Legislative Services notes it is possible the UITF balance could be
sufficiently low (less than $800 million) on September 30, 2023, that Table D, E, or F could
apply in calendar 2024 – but that would depend on claims volume. If this were to occur,
then the appropriate table (D, E, or F) would be the one with the lowest range of rates
allowable until the federal solvency goal is met as the provision only allows for movement
in one direction – to higher tax rates.
Unemployment Insurance Trust Fund – Expenditures
Nonbudgeted UITF expenditures are affected only to the extent that available funds affect
the amount and timing of UITF loan repayments and are used for other administrative costs,
although the magnitude and timing are unknown.
Interest Payments
Absent the cash infusion under the bill, MDL may have begun to accrue interest on
borrowed funds beginning in early September 2021; interest is due each November and
must be paid with general funds or other State funds. Therefore, general fund expenditures
for interest payments potentially decrease in fiscal 2022 and/or 2023.
Small Business Effect: Generally, small businesses pay lower State UI taxes in
calendar 2022, 2023, and likely 2024. The effect on most small businesses is meaningful,
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particularly in the short term. See the appendix for the range of rates most employers pay
under each tax table; with most businesses paying near the bottom of the range of rates,
moving from Table F ($187 per employee) to Table C ($85 per employee) saves each
business about $100 per employee per year. Another way to consider the small business
effect is that employers are ultimately responsible for replenishing UITF – the bill results
in $1.1 billion in federal funds replacing what would have otherwise eventually been
recouped through UI taxes collected from employers. Still, not all businesses pay UI taxes
based on the table of rates. For example, new employers pay a fixed rate, currently 2.6%,
which is not affected by the bill.
Additional Information
Prior Introductions: None.
Designated Cross File: None.
Information Source(s): Maryland Department of Labor; Department of Legislative
Services
Fiscal Note History: First Reader - March 1, 2021
rh/ljm Third Reader - April 7, 2021
Revised - Amendment(s) - April 7, 2021
Revised - Updated Information - April 7, 2021
Analysis by: Stephen M. Ross Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 811/ 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.
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 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 and is likely to be in effect for at
least two more years; 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 811/ Page 6


Statutes affected:
Text - First - Unemployment Insurance – Computation of Earned Rate of Contribution – Applicable Table of Rates: 8-612 Labor and Employment, 8-610 Labor and Employment
Text - Third - Unemployment Insurance – Computation of Earned Rate of Contribution – Applicable Table of Rates: 8-612 Labor and Employment, 8-610 Labor and Employment