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RELEASE: Rep. Novotny: Local Employer Tax Increase Moves Forward Due to House Democrat Inaction

Thursday, March 17, 2022

ST. PAUL – The March 15th deadline to prevent unnecessary tax increases on every business owner in the state has come and gone. State Representative Paul Novotny, R-Elk River, says that House Democrats are to blame for the financial pain employers will see.

“As all of us are dealing with the impact of soaring energy costs and the highest levels of inflation seen in more than forty years, it is unconscionable to think that prices could go even higher as main street businesses deal with the effects of this massive tax hike,” said Novotny. “Legislation to prevent these taxes from taking effect has broad support from Gov. Walz, both parties in the Senate, and House Republicans. With significant federal relief funds, we had more than enough resources to do the right thing, to get this fixed, while preserving the budget surplus so that we can use that on permanent tax relief for all Minnesotans.”

Minnesota needs to replenish its Unemployment Insurance (UI) Trust Fund by more than $1 billion. Novotny said $9.3 billion in available state surplus funds could be used for this purpose, but he instead prefers that federal COVID relief funding that Minnesota has already received from Washington D.C. be used instead. By not utilizing either of these pots of money, the default repayment increases taxes on local employers by 15% or more.

Last month, Governor Walz’s employment commissioner said March 15 was the deadline for the lawmakers to pass legislation and prevent significant tax increases on Minnesota businesses. Novotny said the commissioner told the workforce committee that a failure to act would “create major problems” for the State of Minnesota.

Since then, the Minnesota Senate approved a full UI repayment bill on an overwhelming 55-11 bipartisan vote three weeks ago, while House Democrat leadership did nothing. Before the deadline, Novotny noted House Republicans twice tried to move legislation that would have prevented these tax increases. In both cases, House Democrats blocked them from debate.