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Bill to lift unemployment insurance tax increase enacted

Monday, May 2, 2022


ST. PAUL – Legislation to repay Minnesota’s unemployment insurance trust fund deficit and reverse tax hikes employers in the state faced despite a $10 billion surplus has been enacted into law.

Rep. Joe McDonald, R-Delano, said he was pleased the House approved this bill (S.F. 2677), which provides $2.7 billion to fully repay the trust fund which was depleted with more people out of work during the pandemic.

Senate Republicans approved a clean bill to rectify this issue in February, with broad, bipartisan support. House Democrats delayed action until late April, when they added more than $1 billion in other funding to the bill. McDonald said this change complicated matters and delayed final approval, costing state taxpayers $50,000 in interest for every day the legislation languished.

“This bill should have been passed months ago and the serious delays House Democrats caused by treating our employers like bargaining chips was politics at its worst,” McDonald said. “It is good we got this done before any more damage was done. Now, we need to get serious about finding ways we can truly provide tax relief in Minnesota. Let’s set the bar higher than simply stopping a needless tax increase from taking place amid a historic state surplus. There is still time to make permanent tax relief happen this session and it should be a top priority.”

Final language in the package includes $500 million in payments to frontline workers – approximately $750 per person – and $190 million is provided to Minnesota Management & Budget for continued COVID-19 expenses. Another measure allows just one legislative body to reject an expenditure instead of the current requirement for both bodies to object.

Approval of this bill replenishes the unemployment insurance trust fund, uses the state’s remaining federal American Rescue Plan funding and halts automatic payroll tax increases that kick in by default when the trust fund dips beneath required levels. The bill was widely supported, with a 124-5 House vote and near-unanimous passage in the Senate on Friday before Gov. Tim Walz enacted it the same day.


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