(The Center Square) – Despite a $9.2 billion projected surplus, the Minnesota Legislature failed to stop a $2.7 billion payroll tax hike on businesses statewide, exacerbated by 40-year-high inflation and record gas prices.
Alicia Cordes-Mayo, a spokeswoman for the Department of Employment and Economic Development (DEED), said March 15 is the last day to pass a bill to dodge the tax hike.
“Lawmakers are continuing negotiations to avoid that tax hike, alongside the frontline worker payments, but every day beyond March 15 complicates accurately calculating and paying [Unemployment Insurance] taxes for businesses,” Cordes-Mayo wrote in an email to The Center Square.
In February, The GOP-dominated Senate approved a bill aiming to replenish the fund with $2.7 billion.
On Monday, The DFL-controlled House adjourned until Thursday – past the Tuesday deadline to fix the problem.
Minnesota Chamber President and CEO Doug Loon said he was disappointed.
“It’s extremely disappointing that the House of Representatives chose to use small and mid-sized businesses as a negotiating chip instead of holding Minnesota employers harmless for pandemic shutdowns,” Loon said in a statement. “Solvency for the state’s Unemployment Trust Fund should not be a partisan issue.”
The $2.7 billion tax will hit businesses already beaten by the COVID-19 pandemic, restrictions, and inflation, Loon said.
“Minnesota businesses are facing rising inflation, a workforce crisis, supply chain disruptions and more. A $2.7 billion tax increase on businesses while the state has a record $9.3 billion surplus and over a billion dollars in unused federal funds is political gamesmanship, punishes employers, fails to fix a critical worker safety net and slows the state’s road to recovery.”
Lawmakers had had more than six months to act but haven’t.
Gov. Tim Walz tweeted that lawmakers should set aside their differences.
“Our state has the budget surplus to do the right thing, replenish the UI trust fund to help small businesses, and provide $1,500 to frontline workers. Let’s recognize the relationship between businesses and workers and get BOTH of these things done immediately.”
The stalemate could jeopardize other deadlocked priorities such as agreeing on drought legislation and hero pay.