Unemployment Fund in Danger of Being Depleted, Lawmakers Are Warned

As the public health crisis spurred by the COVID-19 pandemic worsens, Maryland lawmakers convened Wednesday to discuss the projected medical and financial impacts. 

Gov. Lawrence J. Hogan Jr. (R) told the Joint COVID-19 Response Legislative Workgroup that the worst-case scenario forecasts the death of millions of Americans. 

“And according to the leaders in the Trump administration … if we do everything perfectly, and we take every single one of these steps, the very best case scenario that we can possibly hope for is losing 100,000 Americans, which is …  more than we lost in the Vietnam War and the Korean War added together,” Hogan said. “And it’s not, it’s not going to happen over decades, it’s going to happen over a couple of months.”

The governor addressed a number of lawmakers’ questions during the teleconference, including those surrounding adequate coronavirus testing, which is a hot topic across the country.

Hogan said that Maryland requested 138,000 tests, and has completed 17,000. He said that there is a “lag time” between the federal announcement of new tests and when they actually become available.

“This is not the way that we would ordinarily conduct public health surveillance, and so we do believe that our confirmed cases do not align with where the infection is at this point because simply we don’t have the supplies to be able to do the kind of testing that we would love to do,” said Deputy Secretary for Public Health Services Fran Phillips.

Hogan told lawmakers that the economic impact of the virus will be “just as bad.”

“Our number one priority is saving people’s lives, but we also know it’s a tremendous economic hardship and we’re going to have, you know, upwards of 20, 25% unemployment and, you know, massive harm to our small businesses,” Hogan said.

Unemployment is on the rise in the state. The week of March 15, the Department of Labor saw 42,334 new claims filed. 

Maryland Labor Secretary Tiffany Robinson stated that the average number of claims filed each week is a mere 2,000.

The department publicizes the previous week’s number of claims every Thursday at 8:30 a.m. Because this meeting was held on Wednesday, Robinson did not have the updated number to disclose to the joint committee, but said that the state has “taken more claims … in the month of March than the entire year of 2019.”

“In the past week, that 42,000 number that we took the week before has been blown out of the water,” she said.

This poses difficulties for her staff, who largely are dealing with people who have never had to file for unemployment benefits before. Robinson said that they spend a fair amount of time counseling and fielding questions while they are taking claims. 

The flood of new claims has caused their online services to take a hit. Robinson said that the U.S. Department of Labor’s website has a database that verifies Social Security numbers through a portal on the Social Security Administration’s website. Because that portal needs to be accessed by applicants nationwide, it’s prone to crashes — often kicking people out of the system.

“It’s spinning the wheels and putting people on hold for long times, and then they can’t move forward,” she said.

Robinson told the joint committee her agency has attempted to take steps to mitigate these wait times and technological problems. They have extended the call center hours, added more servers to take on the increased internet traffic and have created new email addresses for customers to send questions rather than sitting on the phone for long hold periods.

Robinson told the committee that she is grateful for the emergency legislation that lawmakers passed expanding state unemployment benefits for people who have lost their jobs during the crisis, adding that the department has temporarily chosen to waive all work search requirements for 10 weeks.

“Due to labor conditions, it’s really hard, as you can imagine, for people to find work,” she said.

Robinson also brought up Maryland’s state unemployment trust fund, which she said will be depleted. She is hoping to see federal loan forgiveness or grant programs in a future COVID-19 relief package to account for its depletion so that Maryland businesses won’t see an increased tax rate.

She said that as of Tuesday, Maryland’s trust fund held $1.176 billion.

The federal government has been taking action to ease the bleed on the economy by paying for the first week of unemployment insurance benefits claims filed through the balance of the year, in addition to providing zero-interest loans for state trust funds. 

The additional $600 tacked onto the top of current unemployment benefits under the phase three COVID-19 package passed on Capitol Hill last week will be fully funded by the federal government.

Robinson said the unemployment benefits will be available for those who need them for an extra 13 weeks. Currently the state only guarantees 26 weeks of unemployment payments.

The federal view

Also in attendance at the virtual meeting was Jim Notter, personal office director of U.S. Rep. Steny H. Hoyer (D-Md.), who offered details on the recently passed congressional relief package, starting with the $1,200 direct payments to taxpayers, which he expects to go out within the next three weeks.

The bill package also provides for the Coronavirus Relief Fund, which apportions $150 billion across the states. Allotments are based on the state’s population size. Each will receive a minimum of $1.25 billion.

The Center for Budget and Policy Priorities estimates that Maryland will see $2.3 billion from that pool.  

Notter broke down the bill by industry, noting $100 billion to be spread across states for hospital relief, $1 billion in funding for the Defense Production Act and $16 billion for the Strategic National Stockpile to replenish dwindling personal protective equipment reserves.

The package accounts for the financial disparity that states may feel on education funding, as well, providing for $13.5 billion in formula grants; states must deliver at least 90% directly to local schools for things like distance learning.

In these uncertain times, many people are experiencing fear for the financial security of their families.

Under the legislation, homeowners who have federally backed mortgages will be eligible for a year-long forbearance on payments without fees or additional interest. 

Those with Federal Housing Administration, Veterans Affairs or U.S. Department of Agriculture loans will be protected by a 60-day moratorium on foreclosures and evictions. 

Renters will also see protection from displacement during the public health crisis. 

Homeowners who hold federally backed loans for their multi-family rental properties will be eligible for 90-day loan forbearance, during which time they are prohibited from charging late fees or evicting tenants who can’t pay.

Similarly, entities that own properties with federally backed mortgage loans will also be prevented from charging late fees or displacing tenants who cannot pay for a period of 120 days.

Finally, Notter mentioned $400 million allocated for states to prepare for the effect of COVID-19 on the 2020 election cycle.

House Speaker Adrienne A. Jones (D-Baltimore County) opened the workgroup’s Wednesday session by describing a letter that she and Senate President Bill Ferguson (D-Baltimore City) sent to Hogan on Monday requesting that he reconsider the State Board of Elections’ decision to not proceed with in-person voting during the June presidential primary.

“States with vote-by-mail only elections had years to transition from in-person voting — not our state,” Jones said. “Our state board of elections wants to do it in two months.”

“We are all concerned for the health of the election staff and volunteers, but a recent trip to the grocery store got me thinking: If we can ask folks to show up to work a checkout stand every day, we can find a way to make sure every Marylander can exercise their constitutional right to vote on one day.”

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