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House Democrat inaction causing tax increase amid historic surplus

Tuesday, March 15, 2022


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. Joe McDonald, R-Delano, 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.

“It is outrageous for House Democrats to sit on their hands as this significant tax increase kicks in, especially at a time the state is sitting on $10 billion in surplus revenue,” McDonald said. “Many Minnesotans have suffered financial losses over the last couple of years, in no small part due to restrictions the governor placed upon workers. Now, House Democrats are making the road to recovery even more bumpy than it already was with the price increases we all are experiencing in today’s economy.”

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.

McDonald 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 in one reported case translates to a $21,000 spike.

“House Democrats continue to try to pass off the tax increase they are responsible for creating as no big deal,” McDonald said. “The House majority is fully responsible for this tax increase. Their attempts to diminish the impacts of their failure on this issue is an insult to hardworking Minnesotans.”

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.


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