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SD unemployment tax rate reduced, debate over who really pays it

PIERRE, S.D. – An $18 million reduction in unemployment taxes has won final approval from South Dakota lawmakers.

The Senate voted 30-3 on Wednesday for HB-1011. The House of Representatives previously passed it 70-0. The legislation now goes to Governor Kristi Noem, who is expected to sign it into law.

Employers would see the lower rates in their 2024 payments.

The state Department of Labor and Regulation administers the re-employment program. Officials there have determined the account is over-funded and recommended the lower rates.

“Well friends, this could be the easiest vote you take this session,” Senate Republican leader Casey Crabtree said. “The bottom line is the numbers don’t lie.”

Senate Democrat leader Reynold Nesiba opposed the cut, however.

Nesiba said the department should put more effort into informing unemployed people that they qualify for benefits. “I think our unemployment insurance program is broken,” Nesiba said, adding that employees pay the tax.

Republican Sen. Jim Stalzer challenged that assertion from Nesiba, who teaches economics at Augustana University in Sioux Falls. Nesiba said employers remit the tax to the fund, but the employee takes a lower wage. “It’s actually coming out of the worker’s hide,” Nesiba said.

Stalzer turned to Crabtree. “The employer pays this,” Crabtree said.

Stalzer said he’s also taught some finance courses. “I assure you this is paid entirely by the employer,” Stalzer said.

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