The sun sets behind the South Dakota Capitol in Pierre on Dec. 5, 2023. (Makenzie Huber/South Dakota Searchlight)
Legislators could soon be asked to impose a higher tax on employers to cover the administrative expenses of the state’s unemployment assistance program, but a lower tax to fund the program’s payouts to unemployed people, sparking concerns of an unequal impact on businesses.
The state’s Reemployment Assistance Advisory Council approved a plan this month to ask legislators for the changes in January.
South Dakota’s Reemployment Assistance program offers a safety net for laid-off workers. Payroll taxes from employers help support the trust fund to cover unemployment claims. Payroll taxes also go toward the administration of the program and toward the Future Fund, which is used by the governor for economic development grants.
The increase in the administrative portion of the taxes is needed, according to state Department of Labor and Regulation Secretary Marcia Hultman, because the administration fund is projected to fall into the red in coming years due to state employee salary increases passed by the Legislature, inflation and other expenses.