ST. PAUL — House Democrats on Monday blocked a second effort to allow a floor vote on bipartisan Senate legislation that would prevent a significant unemployment payroll tax increase. They blocked the latest effort one day before the automatic payroll tax increases would begin, despite having a historic multi-billion dollar state surplus.
State Rep. Dale Lueck, R-Aitkin, indicated the issue centers around the DFL House majority’s refusal to make whole the state’s unemployment insurance trust fund. Lueck said the trust fund was depleted when, “Gov. Tim Walz shuttered Main Street businesses across the state during a lengthy and relentless exercise of emergency powers.”
The state borrowed billions of dollars from the federal government to allow unemployment checks to continue to flow during the governor’s forced shutdown. The shutdown created an unprecedented demand on the unemployment trust fund.
Lueck said two things are needed to fix this. (1) Pay back the federal loan and stop the huge interest payments on the loan, which are estimated to be about $50,000 per day. (2) Restore the trust fund operating balance to pre-covid levels to stop the automatic payroll tax increases.
“The House majority has had a senate bill in their possession for a month that fixes this problem,” Lueck said.“The bill passed the senate on a bipartisan veto-proof 55/11 vote. It repays the loan and restores the trust fund balance to a level that prevents the automatic unemployment payroll tax increases required to restore the trust fund’s fiscal integrity.
“This is politics at its worst. Today we have skyrocketing inflation eating up every family’s weekly paycheck. Now is not the time to impose additional unemployment payroll taxes on our main street employers, that only fuels more runaway inflation, increasing the cost of food, fuel and other necessary items.”
Walz, House Republicans, Senate Republicans, and most Senate Democrats support a clean bill to fully replenish the trust fund.
“The House DFL continues to hold that bill hostage and the March 15th deadline has now passed,” Lueck said. “Their bill, which the Minnesota Department of Employment and Economic Development testified would result in six years of increased unemployment related payroll taxes, has been sitting stagnant in a house committee since early February.”
The agency has raised significant concerns about the consequence of not enacting unemployment insurance trust fund legislation by the March 15 deadline. DEED Commissioner Steve Grove recently told members of the House Workforce Committee 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.
“One of the excuses the House majority members use justifying the delay in preventing higher unemployment payroll taxes is it would benefit big box stores, like the Walmarts, Targets and the Amazons of the world.” Lueck said. “I got news for them, we have 17 small cities in House District 10B, the closest thing we have to a big box store is a few Dollar General and Family Dollar stores.”
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