ST. PAUL – House Democrats blocked a last-ditch Republican effort Monday to vote on bipartisan Senate legislation that could have prevented a tax increase from taking place despite a historic state surplus.
State Rep. Dean Urdahl, R-Acton Township, said the issue centers on the state’s unemployment insurance trust fund that was depleted with more people out of work during the pandemic. The federal government provided funding to the state to keep the program afloat and now that debt of more than $1 billion is due.
“House Democrats are allowing a tax increase to take effect that will end up impacting all of us one way or another,” Urdahl said. “This issue should have been resolved weeks ago, but now people are going to face increased taxes and higher prices at a time the state is sitting on $10 billion in surplus tax revenue.”
Gov. Tim Walz, House Republicans, Senate Republicans, and most Senate Democrats support passing a clean bill to fully replenish the UI funds. The Senate one month ago approved by a veto-proof majority legislation to do so.
But House Democrats continued to withhold that bill through the March 15 deadline. Their own UI bill, which the Minnesota Department of Employment and Economic Development testified would result in six years of tax increases on businesses, has been stagnant since early February.
House Republicans made a move to declare urgency on the matter Monday to take up the Senate bill for a vote but, for the second time in the past week, House Democrats blocked the effort.
Now, a tax increase is set to take place to pay the state’s federal debt despite the fact Minnesota has a surplus of around $10 billion.
Urdahl said members of the House majority continue to downplay the impacts of their inaction on this issue, but said real-life reports indicate the tax increases could be significant. One recent article quotes Greater Minnesota employers saying they face tax increases in the tens of thousands of dollars next year. A 130% increase translates to a $21,000 spike in one reported case.
“This is likely to add a fair amount of strain to employers and consumers alike who already are dealing with increased costs and supply chain issues,” Urdahl said. “The House majority bears full responsibility for holding the UI bill back as a negotiating chip to leverage other issues and now people are going to pay more because of this partisan gamesmanship.”
The Minnesota Department of Employment and Economic Development also has raised significant concerns about the consequences of not enacting UI legislation by March 15. DEED Commissioner Steve Grove recently told members of the House workforce committee Monday that time is critical. “As of (Tuesday) this gets a lot harder to unwind, and time is of the essence on this piece,” Grove said.