Fixing the Roof While the House Is Burning: A Republican Response to Maryland’s Unemployment Fund Crisis

Let’s just be honest: when Democrats start talking about “solvency” and “fixing the roof while the sun is shining,” what they really mean is, “we neglected the roof for thirty years and now we need your money to patch it up—fast.”

That’s exactly what we’re witnessing in Annapolis with the Maryland Unemployment Insurance Trust Fund, where decades of mismanagement, political cowardice, and fiscal irresponsibility are catching up with the state. And now, the same legislators who ignored this problem for years are clutching their pearls at PowerPoint slides and floating massive tax hikes on small businesses to solve a crisis of their own making.

Let’s set the record straight.

The Real Problem: Democratic Mismanagement

Labor Secretary Portia Wu recently warned lawmakers that Maryland’s $2 billion unemployment insurance trust fund could fall below federal solvency guidelines between 2026 and 2027. The culprit? Inflation, higher payouts, and—let’s not forget—decades of stagnation in how the state funds and operates its unemployment insurance system.

But here’s what Wu and her Democratic allies didn’t say out loud: the system has been unchanged since the early 1990s because Democrats have controlled Annapolis for the better part of four decades and repeatedly punted on reform. When Governor Bob Ehrlich—a Republican—left office in 2007, he left the state with a surplus and a stable business climate. But within just a few years, that surplus evaporated, and business costs ballooned thanks to relentless progressive mandates.

Paid family leave, paid sick leave, minimum wage hikes, environmental regulations, and now a potentially massive increase in unemployment insurance taxes? Maryland Democrats have been loading burdens on employers like bricks on a mule’s back, and now they’re surprised the beast is staggering.

The Numbers Game

Currently, Maryland employers pay $26 per employee into the trust fund based on a taxable wage base of $8,500—rates that haven’t changed since 1992. But the maximum benefit hasn’t changed since 2010 either, and now more workers are qualifying for the maximum payout of $430 per week.

This imbalance—growing costs without a growing revenue base—is what economists would call a structural deficit. And structural deficits don’t happen overnight. They’re the result of years of short-term thinking and political fear.

While the unemployment rate remains low at 3.2%, the state is sleepwalking into a crisis. If it returns to its historical average of around 5%, or worse—if the country faces a recession or a major reduction in federal employment—the trust fund will tip into insolvency.

Let me be crystal clear: Republicans are not opposed to reforming the unemployment insurance system. We want a solvent system. But we will not sign off on yet another raid of small businesses and job creators to cover for decades of negligence by the majority party.

A Familiar Pattern

If you’re experiencing déjà vu, it’s because you’ve seen this movie before.

• In 2006, Governor Ehrlich handed the Democrats a surplus.
• Within two years, Democrats blew it with the largest tax increase in state history.
• In 2010, Maryland’s unemployment fund required a $133 million federal loan to stay afloat—again, because the Democratic leadership refused to adjust the system when times were good.
• Fast forward to today, and we’re hearing the same excuses from the same crew.

Senator Ben Kramer and Delegate Lorig Charkoudian, both from Montgomery County—the bluest of blue strongholds—have now proposed updating the fund for a third time in three years. And what’s their solution? Raise the tax base to $15,000 and increase the per-employee tax to as much as $50.

In other words, punish employers for their own failure to govern.

“Fixing the Roof” or Rebuilding the Whole House?

Delegate Charkoudian asked the rhetorical question: “How do we fix the roof when the sun’s shining?” But I have a better question: How do you fix the roof when the house is already on fire, and you’re the one who lit the match?

This isn’t just about UI reform. It’s about a broader pattern of tax-and-spend governance that is unsustainable. Maryland’s business community has been battered by:

• A new digital services tax
• A looming vehicle excise tax increase
• Carbon fuel mandates
• Skyrocketing property assessments and local tax increases
• Paid family leave mandates that haven’t even gone into effect yet

And now, you want to saddle employers with an even higher unemployment tax because you couldn’t bring yourself to index contributions and benefits incrementally over the past three decades?

Economic Suicide by Regulation

Mike O’Halloran of the National Federation of Independent Business nailed it: Employers are already reeling from an onslaught of costs imposed by the state. A sudden spike in unemployment insurance contributions would be the last straw for many.

Let’s not forget, it was small businesses that kept this state’s economy alive during COVID lockdowns—many of which were imposed with little data and less justification. And while the state burned through billions in federal relief and racked up pandemic-era fraud and mismanagement scandals (anyone remember the $500 million in fraudulent UI claims?), it’s the private sector that’s once again being asked to clean up the mess.

If this were a private business, the board would have fired the entire executive team by now.

The Federal Bogeyman

And then there’s the political posturing. Secretary Wu warned of potential job losses under a second Trump administration, citing internal projections of 29,000 displaced federal workers. That’s speculative at best, and partisan fearmongering at worst.

Let’s be blunt: If the viability of your state unemployment fund hinges on the federal workforce remaining bloated forever, that’s a design flaw—not an excuse to raise taxes.

And if you’re building policy around fear of Donald Trump rather than basic actuarial math, you’re not serious about governing. You’re just campaigning in committee meetings.

What Republicans Propose

Here’s what a responsible, pro-growth, Republican approach would look like:

1. Audit the Trust Fund: Before demanding more money, conduct a forensic audit of UI disbursements, especially during the pandemic years. How much was lost to fraud? How many ineligible claimants received benefits?
2. Modernize Gradually: Yes, both the contribution base and benefit levels need adjustment—but incrementally, and tied to inflation or wage benchmarks. Don’t shock the system with sudden, unpredictable jumps.
3. Cut the Mandates: Before asking employers to give more, remove burdens elsewhere. Repeal or pause scheduled mandates like the family leave tax until the UI fund is stabilized.
4. Create a Rainy Day Backstop: Use excess general funds or revenue surpluses to temporarily bolster the UI fund, rather than hiking employer rates. The state budget is $63 billion. You can find the money.
5. Stop Playing Politics: Planning for a Trump recession while ignoring the damage already done by Bidenomics—record inflation, interest rate hikes, and a credit crunch—is disingenuous. Acknowledge economic realities without spin.

Fiscal Responsibility Is Not a Dirty Word

The truth is, fiscal responsibility only exists in Annapolis when Republicans are in power. That’s why it’s no coincidence that the UI trust fund was most stable under Republican leadership. Democrats, on the other hand, are experts at spending other people’s money until it’s gone—and then blaming the “rich” or “business owners” when they need to refill the coffers.

And guess what? Employers aren’t ATMs. They’re people. They’re families. They’re job creators who took risks to open restaurants, shops, law firms, IT startups, HVAC companies, and more. You keep taxing them into oblivion, and they’ll either close shop—or take their businesses elsewhere.

Maryland already ranks near the bottom in tax climate for small businesses. Keep this up, and the only employers left in the state will be government agencies and nonprofits funded by grants.

Final Word

So the next time someone like Sen. Kramer or Del. Charkoudian says, “Let’s begin the conversation,” ask them where they were in 2010, 2015, or 2020. Because Republicans like Bob Ehrlich and Larry Hogan were sounding the alarm while Democrats were busy hosting press conferences and dreaming up new entitlements.

Now that the roof is caving in, they want to borrow your ladder and blame you for the leak.

No thanks.

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Endnotes

1. Maryland Department of Labor. Unemployment Insurance Trust Fund Reports, 2023–2025. Available at: https://www.dllr.state.md.us
2. Joint Committee on Unemployment Oversight. Briefing Transcript: Maryland UI Fund Solvency Discussion, July 8, 2025. Statements by Secretary Portia Wu and members of the committee.
3. National Federation of Independent Business (NFIB) – Maryland Chapter. Policy Brief: Employer Burden and UI Tax Impacts, April 2025.
4. U.S. Bureau of Labor Statistics (BLS). Local Area Unemployment Statistics: Maryland, June 2023 – May 2025. Available at: https://www.bls.gov/lau/
5. Comptroller of Maryland. General Fund Fiscal Outlook and Surplus Reports, FY 2022–2025. Available at: https://www.marylandtaxes.gov
6. Maryland Department of Legislative Services. Fiscal and Policy Note: SB 413/HB 543 – UI Modernization Act, 2023 Session.
7. U.S. Department of Labor. State Unemployment Insurance Trust Fund Solvency Report, 2024. Maryland listed “at risk” based on current projections and average unemployment return scenarios.
8. Office of Legislative Audits – Maryland General Assembly. Audit of Pandemic-Era UI Disbursements, March 2024. Found up to $487 million in fraudulent or improper payments during 2020–2022.
9. Governor’s Office of Budget and Management (GOBM). Economic Forecasting Models for Workforce Reductions under Federal Realignment Plans, May 2025. Reference to hypothetical federal workforce cuts.
10. Tax Foundation. State Business Tax Climate Index – 2024. Maryland ranked 46th out of 50 states in overall business tax competitiveness.

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Aaron Ackerman is a Contributor for Direct Line News – Aaron can be reached at Aaron.Ackerman@mcgopclub.com

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