Because of one word, Minnesota can’t issue refunds for overpaid unemployment tax

Businesses can still receive credits if they paid a higher rate on unemployment taxes

By: - June 3, 2022 9:32 am

The gold quadriga stands atop the Minnesota Capitol. Photo by Max Nesterak/Minnesota Reformer.

They should have written “article” instead of “section.”

After months of negotiations, Gov. Tim Walz signed a bill on April 29 pouring $2.7 billion into the state’s unemployment insurance trust fund, which had been drained by a record number of claims during the pandemic.

Without that law, Minnesota businesses were set to suffer a 30% increase in their unemployment taxes, triggered when the fund is below a certain threshold.

State lawmakers managed to pass the law (SF 2677) the day before the April 30 deadline to submit taxes, but alas, some businesses had already paid their quarterly taxes at the higher rate.

Businesses that already overpaid were reassured by state officials they could either request a refund from the state Department of Employment and Economic Development (DEED) or else receive a credit on their future taxes.

But because of one improper word choice — “section” instead of “article” — Minnesota Management and Budget (MMB) says the state doesn’t have the authority to issue refunds to businesses that request them.

Lawmakers drafted language to correct the error but it was included in the omnibus jobs bill (SF 4091), which did not pass.

The problem appears to be that the money was unintentionally approved for just one section of the bill that did not include the part for the unemployment tax refunds.

The drafting error in the unemployment insurance law is a minor inconvenience for most businesses, which can still receive a credit on future taxes. Still, it illustrates the way even small errors can upend governance — and the risks of Legislature’s tradition of rolling lots of policies into large bills, which can trap bipartisan agreements in the quagmire of politics.

Lawmakers drafted language to correct the unemployment mistake, but it was folded into the jobs “omnibus” bill, one of several massive pieces of legislation that lawmakers failed to pass before the end of the legislative session.

The governor has said he wants to call a special session to bring lawmakers back to the table to hammer out compromises on those bills — including education and public safety — but Republicans seem uninterested in returning to the Capitol to complete work they say should have been done during the regular session.

In an email, MMB spokesman Patrick Hogan said they “remain hopeful that the Legislature will finish this and other bipartisan agreements to improve the lives of Minnesotans across the state during a brief special session.”

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Max Nesterak
Max Nesterak

Max Nesterak is the deputy editor of the Reformer and reports on labor and housing. Most recently he was an associate producer for Minnesota Public Radio after a stint at NPR. He also co-founded the Behavioral Scientist and was a Fulbright Scholar to Berlin, Germany.