South Dakota Employers Could Pay Less Unemployment Tax

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KELO Pierre Capitol building legislature

Contribution rates that South Dakota businesses pay for unemployment insurance would drop about $2.5 million in calendar 2020 under a plan state lawmakers endorsed Wednesday.

The House Commerce and Energy Committee voted 13-0 to recommend cutting the tax rates and sent House Bill 1034 for the full House of Representatives to consider.

State Labor and Regulation Secretary Marcia Hultman said the South Dakota Unemployment Insurance Advisory Task Force doesn’t want to have to seek surtaxes again.

Surtaxes became necessary about a decade ago when the Great Recession rocked much of the world economy and sent South Dakota’s unemployment trust fund deep into red ink.

The fund gradually came back, helped by a federal loan. Lobbyists lined up to support the tax-cut legislation Wednesday.

“If these rates were going up, we’d all be here howling like mashed cats,” David Owen said. He is president for the South Dakota Chamber of Commerce and Industry and serves on the advisory panel.

“It is wonderful to have stability in the trust fund,” said Deb Mortenson, speaking for the heavy-construction wing of the Associated General Contractors of South Dakota.

Others backing the bill included the National Federation of Independent Business, the Association for Human Resource Managers, the Rapid City and Sioux Falls Chambers of Commerce and the South Dakota Retailers Association.

No one opposed it.

Secretary Hultman explained the department has started using two tables of rates and would switch to the second one if economic conditions worsened.

Representative Mark Willadsen recalled serving in the House when the surtax became necessary. The Republican from Sioux Falls said, “It was a bit of a painful operation.”

The House committee also recommended House Bill 1035 that would change the name of the state’s unemployment insurance program to the reemployment assistance program.

“Words are important,” Hultman told lawmakers. She said it would be “one simple albeit impactful change” that better reflects the program’s intent of getting people back to work as quickly as possible.

“Study after study” has shown people became less and less likely to be re-employed the longer they were out of jobs, Hultman said.

Representative Rhonda Milstead, a Hartford Republican, praised the proposed name change. But Representative Kaleb Weis, an Aberdeen Republican, questioned the cost.

“We haven’t put a dollar amount to it exactly,” Hultman replied. But she assured the panel, the department wouldn’t rush into it and would gradually switch forms as current supplies ran out.

The vote was 11-2 to send the bill to the House.

Hultman said Florida has already changed its state law to reflect the different emphasis and the federal government has promoted it nationally.

Representative Carl Perry liked it. “I whole-heartedly think this is a really good idea,” the Aberdeen Republican said.

“I’m humbled by comments in committee this morning,” Hultman responded.

Representative Tim Rounds, the committee chairman, supported the new name. “I think it’s going to take some time, but I think it will catch on,” the Pierre Republican said.

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