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Leaders of the Maryland Chamber of Commerce and Maryland Retailers Association agreed this week to back an amended legislative proposal that would beef up the state's unemployment insurance fund by tapping $126.8 million in federal stimulus money.

That backing was considered by many to be vital to the measure's adoption. According to legislative analysts, the amended bill will offset any potential costs incurred by accepting the federal money.

The Senate Finance Committee approved the compromise, and the full Senate was expected to consider it today. The bill would then go to the House.

Meanwhile, hearings were held Thursday on a measure that would let Montgomery County make equity investments in companies doing business in the state and another proposal requiring some of the state's pension fund to be invested in high-tech companies in Maryland.

Sen. Thomas McLain Middleton (D-Dist. 28) of Waldorf, who has coordinated negotiations on the unemployment insurance fund issue with business and labor groups for several weeks, said he thought the revised bill would have "pretty smooth sailing."

"I think it's something that nobody is wildly in love with, but it's something we can all live with," said Middleton, chairman of the Senate Finance Committee and co-chairman of the legislature's Joint Committee on Unemployment Insurance Oversight.

But Middleton, who chairs the Finance Committee, also said early Thursday that he talked with Gov. Martin O'Malley (D) to find $3 million to help very small businesses that could close because of skyrocketing unemployment insurance rates.

Some businesses have seen their unemployment insurance rates rise from $3,000 to $30,000, Middleton said. The money would pay for a fund that would guarantee bank loans to cover the increases.

The state chamber of commerce's Legislative Committee voted Monday to accept the new version, said chamber CEO Kathleen Snyder. Political leaders ironed out the new plan after weeks of negotiations. The chamber had opposed the bill until Monday.

"We really have gotten what we asked for," Snyder said. "This is as close to a guarantee of cost neutrality as possible. ... Certainly, there will be pain [in seeing rates more than triple], but having the payment plan will help ease that pain."

The Maryland Retailers Association also backs the compromise, said Thomas S. Saquella, that trade group's president.

Under the plan, the state will eliminate sick claims filed by unemployed workers and increase the minimum weekly benefit threshold that claimants can collect to $50 from $25, meaning fewer workers will be able to collect. The plan also boosts penalties for workers fired for misconduct and lowers wages that claimants can earn while getting jobless benefits without reducing benefits to $50 from $100. The value of the offsets is from $18.2 million to $19.5 million annually, according to state legislative analysts.

The plan shelves $83 million in premium relief this year proposed by O'Malley. Business leaders wanted to use that money to strengthen the trust fund immediately to try to get off the highest payment level — table F — sooner.

To gain the federal stimulus money, Maryland must extend benefits to more workers, such as those in approved job training programs. It also must adopt the alternative base period method of calculating claimants' eligibility for benefits. Maryland now doesn't consider work in the unemployed worker's most recent three months, but most states use the alternative base period, which includes that last quarter. Those changes would cost the state from $18.4 million to $19.4 million annually, according to legislative analysts.

The federal government is likely to mandate the alternative base period method in the next few years anyway, so the state might as well benefit by tapping the stimulus funds now, Middleton said.

In addition, businesses can pay their taxes to the unemployment insurance trust fund in installments this year, and monthly interest on late payments will be reduced to 0.5 percent from 1.5 percent. Those aspects were key to gaining chamber leaders' approval.

Maryland's unemployment insurance fund, which pays out benefits to the unemployed, has declined to just about zero from $680.2 million a year ago, according to state figures. That decline sparked the large hike in unemployment insurance taxes.

This year, the minimum rate employers are paying is $187 per employee, up from $51 last year.

Labor groups and the Job Opportunities Task Force, a Baltimore nonprofit that advocates for lower-income workers, also threw their support behind the amended version.

"We think we reached a successful middle ground that avoids some potentially devastating cuts," Jason Perkins-Cohen, executive director of the Job Opportunities Task Force, said in a statement.

Middleton said he is hopeful that people will view this struggle between business and labor groups in the context over the last few years. He pointed out how labor organizations understood the difficult business climate in recent years and how the business community "stood very firmly behind labor and the poor in raising the maximum daily allowance" and extending unemployment benefits to part-time workers.

"It's a win-win when you look at this in total over the last three to four years," Middleton said.

Montgomery vying to invest

in bioscience companies

Also this week in Annapolis, a hearing was held Thursday on a House bill to authorize the Montgomery County Department of Economic Development to make equity investments in companies that do business in Maryland and require the investment "to be consistent with specified local investment guidelines." The county's recently released bioscience industry strategy calls for such investments.

Steven A. Silverman, the county's economic development chief, said before the hearing that the county wouldn't be taking on more risk with such investments.

"Right now — this is why it's important to understand the context in which the bill has been proposed — we engage companies through our economic development fund with loans or by giving out grants," Silverman said. "All this does is to say there's another option on the table, and that's to invest in the company, to be able to get a return on that investment.

"The criteria [for choosing companies] will not change. For the first time, we'll be able to say to a company, ‘Rather than just give you money in a grant or a loan, we'd actually like to take an upside. What it does to some extent is to create a stamp of approval for the company," Silverman said.

Also on Thursday, Sen. Robert J. Garagiola (D-Dist. 15) of Germantown and other supporters testified before a Senate Budget and Taxation Committee subcommittee on his bill requiring the state to invest, over five years, $50 million of its current $31.89 billion pension fund in venture capital funds that invest in qualified information technology, green technology, medical device technology or bioscience businesses. Garagiola introduced a similar measure last year.

Such pension fund investments would "send a signal about Maryland ... that our door is open" to technology businesses, Garagiola said after the hearing. The $50 million "could leverage a billion dollars or more" in venture capital investments in Maryland's high-tech companies.

Staff Writers Alan Brody, Douglas Tallman, Sebastian Montes and Robert Rand contributed to this report.

General Assembly Resources

Maryland General Assembly, legislation details and updates: http://mlis.state.md.us/#bill

Chamber Action Network, an alliance of Maryland chambers of commerce: 410-269-0642, www.chamberactionnetwork.com

Maryland Chamber of Commerce, position on bills: www.mdchamber.

org/legislative/bills/index.asp