Federal Budget Deal Fails to Extend Unemployment Benefits for Over 82,000 Marylanders

Over 82,000 Maryland residents will lose their unemployment benefits in 2014 if federal lawmakers do not act to extend them. Last week, federal lawmakers agreed to a two-year budget agreement prior to adjourning for the holiday break, but failed to reach agreement on extending unemployment benefits for those still looking for work amid a sluggish economic recovery.

Maryland, like most other states, provides 26 weeks of temporary unemployment insurance to those that have lost their jobs. At the beginning  of the Great Recession began in 2008, Congress provided unemployed workers with additional benefits through the federal Emergency Unemployment Compensation program. But absent reauthorization, this program will expire at the end of the year. If Congress fails to act, almost 23,000 Maryland residents will lose benefits just after Christmas and another 28,500 will be cut off in the first six months of 2014. Further, absent reauthorization, those that lose their job in the first half of 2014 will see their unemployment benefits expire before the end of the year. In total, 82,600 Maryland residents will lose their unemployment benefits.

While emergency unemployment benefits are intended to phase down as the economy recovers, many are still having trouble finding jobs in a labor market that has yet to fully recover from the great recession. Indeed, there are still 1.5 million fewer jobs available in the national economy than there were prior to the start of the Great Recession six years ago, and almost 3 unemployed citizens for every job opening.

This is a problem, particularly since over 37 percent of those out of work are part of the ‘long-term unemployed,’ or those who have been out of work for six months or longer. According to the Economic Policy Institute, there are three times more long-term unemployed now than there were before the recession. Those who have been out of work for long stretches of time have a particularly hard time finding work, as studies show that employers are less likely to consider them for jobs.

These factors, combined with the unprecedented nature of the current long-term unemployment problem, should compel Congress to act on their behalf. As the Center on Budget and Policy Priorities points out, the long-term unemployment rate is at least twice as high now as when federal lawmakers have allowed emergency unemployment benefit to expire following previous.

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Besides the toll on the unemployed and their families, the failure to extend unemployment benefits has economic impacts as well. If benefits expire, job-seekers will have considerably less money to spend, which will reduce demand in the economy. The result would be a nationwide loss of 240,000 jobs in 2014, according to the Department of Labor. Further, rather than serving as a disincentive to look for work, the National Employment Law Project shows that unemployment insurance, by helping job seekers and their families pay for basic necessities, enables them to actively engage in the job hunt.

While securing a budget deal is an important step, lawmakers must do more to ensure full economic recovery and support citizens still trying to weather the Great Recession.

Check back for more coverage on the budget and its effect on federal workers in Maryland. 

Federal shutdown bad news for Maryland

For the first time in 17 years, much of the federal government has shut down. This is bad news for Maryland and the nation's economy and for the public that benefits from a wide array of public services.

The parts of the federal government that haven't shut down are either "essential" (mostly activities that protect life and property); are funded outside of the appropriations process (like Medicare and Social Security); or have other funds available, at least for a little while (for example, Medicaid has enough money for the next quarter, and housing vouchers will be unaffected in October).

But lots of other important programs will be affected, including many that help our most vulnerable neighbors. For example:

• Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is not funded for FY 2014. States do have a few funding streams they can use to temporarily cover the loss, but they won't last long.
• Temporary Assistance to Needy Families (TANF) has now expired. States should have already appropriated the matching funds required for the program, and could potentially use these funds to maintain the program until a new appropriation or continuing resolution is passed.
• Child care funding is in the same situation as TANF.

If you want to learn more about a specific program, check out the contingency plans by federal agency.

Here are a few estimates of what the shutdown will cost Maryland:

• Furloughs could cost Maryland $5 million a day in income and sales tax collections and perhaps $15 million a day in overall economic activity, according to the governor's office.
• Dr. Daraius Irani, executive director of the Regional Economic Studies Institute at Towson University estimates that a partial government closure could mean between $18 million and $68 million a day in lost income for Maryland workers, and between $700,000 and $2.5 million a day in lost income tax collections. His analysis does not include lower tax collections from furloughed workers cutting back on their spending.
• Dr. Stephen Fuller, director of the Center for Regional Analysis at George Mason University, estimates the DC region (not just Maryland) could see losses up to $200 million a day. Dr. Fuller's analysis excludes tourism and cuts to direct services such as new Medicare or Social Security applications, small business loans, and child-care subsidies.
• The Baltimore Sun also has a slideshow illustrating the shutdown's effects on Maryland.

In other more positive news, the Maryland Health Connection opens at noon today. Part of the Affordable Care Act (ACA), this exchange allows individuals and small businesses to shop for health insurance, including using tax credits if they qualify. Implementation of the ACA is unaffected by the shutdown.

Close-out - revenues slightly under estimate. Maryland ends year with $1.2 billion in the bank.

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 Comptroller Peter Franchot today released the results of the state’s close-out of fiscal year 2013. Fiscal year 2013 began July 1, 2012 and ended June 30, 2013.

The state ended the fiscal year with $510 million in the general fund and $700 million in the “Rainy Day” reserve fund, for a combined balance of $1.2 billion.

General fund revenues fell $62.4 million short of official estimates, growing 4.5 percent over fiscal year 2012. General fund revenues for fiscal year 2013 totaled $14.9 billion.

Favorable variances in expenditures and transfers offset $15.4 million of this loss, so general funds overall finished $46.9 million below the previous estimate.

The Bureau of Revenue Estimates cited poor growth in wages as a cause of the reduction. However, most of the shortfall in revenue was actually in the corporation income tax. Individual income taxes actually finished very slightly above the estimate. Losses in withholding were offset by gains in final payments (or refunds) of 2012 taxes.

The Board of Revenue Estimates will meet on September 17 to release revised revenue estimates for fiscal year 2014 and the preliminary estimate for 2015. The $62.4 million shortfall in fiscal 2013 is less that one half of one percent of general fund revenues. By itself, it does not materially affect the state’s financial picture.

 

Reserves are adequate enough so that mid-year adjustments are unlikely to be needed in the current fiscal year 2014. If the Board of Revenue Estimates determines that federal budget cuts and the state’s overall prospects for income growth will seriously harm future revenue collections, it could make it more difficult for the state to meet current service commitments in fiscal 2015.

A Glossary of Surpluses and Deficits
+$1.2 billion	FY 2013 total balance	The state’s total available reserves as of June 30, 2013, including $511 million in general funds and $700 million in the “Rainy Day” reserve fund
+$511 million	FY 2013 general fund balance	The amount in the state general fund on June 30, 2013
+$247 million	2013 unassigned funds balance	The amount that would be left in the general fund on June 30, 2014 if there were no changes to the FY 2014 enacted budget
-$46.9 million	FY 2013 general fund actual below estimate	The amount by which the fiscal year 2013 ending general fund balance was below the previous official estimate. The $62.4 million shortfall in revenue was partially offset by $14 million in below-estimated expenditures and $1.4 million in transfers in excess of the previous estimate
-$62.4 million	FY 2013 revenue shortfall	The amount by which actual revenues for fiscal year 2013 fell short of the official estimate

Low-Income Marylanders Face Food Assistance Cut in November

774,000 low-income people in Maryland will see a cut in their food assistance benefits this fall, when a temporary boost to the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) is set to expire, according to new data released by the U.S. Department of Agriculture (USDA). A new report from the Washington-based Center on Budget and Policy Priorities analyses the impacts.

SNAP benefits will average less than $1.40 per person per meal after the cut. All of the 47 million Americans, including 22 million children, who receive SNAP, known as the Food Supplement Program (FSP) in Maryland. will experience the reductions.


To strengthen the economy and ease hardship resulting from the Great Recession, Congress approved a modest boost in benefits to SNAP recipients as part of the American Recovery and Reinvestment Act (ARRA). The increase expires on October 31. For a family of three, that cut will amount to $29 a month — $319 for the remaining 11 months of the fiscal year.

This small increase in Supplemental Nutrition Program benefits has helped 774,000 struggling families in Maryland stay afloat during the worst economic crisis since the Great Depression. For many of these families, this modest assistance is providing a lifeline to those who are struggling to find work, or are working at jobs that do not pay them enough to put food on the table.

In addition to helping to feed hungry families, SNAP is one of the fastest, most effective ways to stimulate a struggling economy.  Every $1 increase in SNAP benefits generates about $1.70 in economic activity.

The across-the-board cuts scheduled for November will reduce the program nationally by $5 billion in fiscal year 2014 alone. Cuts of that magnitude will have a significant impact on low-income families.

SNAP has never before experienced a reduction in benefits that impacts all participants, including 22 million children nationwide. Given the fact that benefits are already inadequate for many families, these cuts will be particularly painful.

On top of these across-the-board cuts to the program, the U.S. House of Representatives recently defeated legislation that would have cut $20 billion from SNAP, eliminating food assistance for nearly two million people. This would leave many families and their children without assistance to put food on the table when they need it most.

The House is considering and could vote on even deeper cuts to the program in the coming weeks.

The Supplemental Nutrition Program has been a powerful tool in helping to keep families out of poverty. The majority of recipients who are able to work, do so. And for those who can’t or are temporarily unable to find a job, SNAP has helped to give them a leg up. Now is not the time to further reduce this already modest assistance to these struggling families.


In Maryland, the benefit cut through October 2014 will total $82 million, slowing economic growth by reducing overall consumption. Nationally, the cut will total roughly $5 billion in federal fiscal year 2014 and an additional $6 billion across fiscal years 2015 and 2016.

More information about Maryland’s SNAP program is here. Maryland Hunger Solutions also provides a wealth of information about food insecurity in our state, and the successful programs that are fighting hunger.