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. Jordan Rasmusson, R-Fergus Falls, 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.
“This might formally be a tax on employers but, let's be real, it's going to cost us all more at a time we already are paying higher prices in the current economy,” Rasmusson said. “I just don’t know how House Democrats can ignore the consequences their lack of action is going to mean for Minnesotans. This should be a time we are pulling out all stops to get our economy going and to help people get back on their feet after losing income during the pandemic. Instead, House Democrats are just adding to the burden and making it more difficult to recover.”
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.
Rasmusson 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. In one reported case, a 130% increase translates to a $21,000 spike.
“House Democrats spent a lot of time on the House floor Monday making excuses for why they didn’t want to fix this problem but none of that is going to matter to Minnesotans,” Rasmusson said. “Minnesotans are going to know House Democrats are responsible for a tax increase at a time the state has a historic surplus and that’s not going to sit well with people.”
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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