Hultman: $3 million fee hike to touch all employers

Yahoo

04-02-2025

PIERRE, S.D. (KELO) — The South Dakota Legislature is considering whether to allow the state Department of Labor and Regulation to increase an administrative fee that helps pay for operating the state's reemployment fund and have the fee expand so that it applies to all employers.
The legislation, Senate Bill 26, calls for raising the fee to $12 per employee from the current $3. That would generate $3 million, according to state Labor Secretary Marcia Hultman. To offset the higher fee, state reemployment tax rates would be reduced by $3 million.
How 2 Sioux Falls restaurants view possible tariffs
Hultman told the Senate Commerce and Energy Committee that keeping the administrative fee at the current $3 per employee would force the state Reemployment Assistance Division to reduce its workforce from the current 76 to 51.
'This would leave a skeletal crew and an inability to perform basic functions of the division,' she warned.
And if that happened, Hultman continued, South Dakota employers would face a federal unemployment tax increase of $183 million.
Many South Dakota businesses aren't welcoming the fee increase, but lobbyists representing their groups nonetheless spoke in favor.
'If we don't do this fee swap, our businesses will pay more in taxes,' South Dakota Retailers Association executive director Nathan Sanderson testified.
Hultman last year presented the proposal to the state Reemployment Assistance Advisory Council. Sanderson is one of the members.
Julie Johnson, lobbyist for South Dakota Society of Human Resource Managers, attends the advisory council's meetings. She told lawmakers on Tuesday that the legislation is 'a very complicated bill to read' and difficult for some to understand.
Johnson, a former secretary of labor, said she was pleased that Hultman laid out the proposal to the advisory council before submitting the legislation. 'Even though we don't love this bill, we have to deal with it,' she said.
Deb Mortenson, representing Associated General Contractors of South Dakota, noted that many of her members use the reemployment program. That's because some construction projects such as roadbuilding stop during the winter.
The legislation says all employers would pay a $12 administrative fee per employee, regardless of whether they currently pay into South Dakota's reemployment fund. In return, those employers who currently pay into the fund would see a reduction in the amounts they contribute.
Hultman explained that federal funding for the reemployment fund's operation has decreased from $5.5 million in 2021 to $4.9 million in 2024. During the same time, many of the fund's operational costs increased, as state government salaries, benefits and technology charges all rose. She said the higher administrative fee would cover those as well.
No one testified as an opponent.
David Owen, president for the South Dakota Chamber of Commerce and Industry, serves on the advisory council, too. 'This bill is irksome, irritating annoying and objectionable – and we support it,' he said.
The committee voted 9-0 to recommend its passage. The full Senate could consider it as early as Wednesday afternoon. If the Senate approves it, the House of Representatives would act next.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.