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. Paul Anderson, R-Starbuck, 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 tax increase is completely unnecessary and is only going to add to the strain Minnesotans already are feeling with higher prices in today’s economy,” Anderson said. “People are working to recover from income losses they suffered the last couple of years and this tax increase is only going to add to their challenge.”
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.
Anderson 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.
“It is concerning the way the House majority continues to push off this issue as though it’s not a big deal,” Anderson said “They are misrepresenting the UI bill as a tax cut for big corporations when, in reality, the bill would prevent a significant tax increase from taking place on many small businesses throughout the state, including right here in our district. We all will feel the impact of this tax increase one way or another, whether it’s through higher consumer prices, reduced wages or fewer benefits.”
DEED 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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