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. Matt Bliss, R-Pennington, 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.
“It is concerning the House Democrats’ lack of action on this issue will unnecessarily result in raising prices on goods and services even higher at a time we already are seeing costs soaring at 40-year highs and the state has around $10 billion in surplus revenue,” Bliss said. “This issue could have been put to rest weeks ago but, instead, the majority decided to hold back the UI bill as political leverage. House Democrats chose partisan gamesmanship over doing what’s right for Minnesotans. It’s that simple.”
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.
Bliss 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.
“Our focus should squarely be on helping Minnesotans recover income they lost during the pandemic, yet the House majority just made that hill steeper to climb,” Bliss said. “We face an opportunity to provide historic tax relief this session, but House Democrats are taking us the opposite direction. We’re six weeks into the session and all they have to show for it is a tax increase at a time the state has a massive surplus.”
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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