DFL blocks debate in the House to ram through payroll tax hikes

On Wednesday, I wrote that the payroll tax imposed to fund Minnesota’s new Paid Family and Medical leave (PFML) program will be 37% higher in 2027 than when it was passed last year. From the start, the DFL, which pushed this measure, has consistently refused — not failed, but actively refused — to figure out how much this program will actually cost before ramming it through.

Last February, I wrote:

This morning, HF2, the proposal for paid family and medical leave, sailed through its fifth House committee hearing. Perhaps one reason for its speedy passage is that it isn’t weighted down by a fiscal note.

Fiscal notes, according to the House Fiscal Analysis Department:

“…put a price tag on proposed legislation, and are very important in the legislative process. A fiscal note should be an objective opinion on the change in expenditures and revenues that will result from a bill. Legislators need this information to make informed decisions on proposed legislation. A fiscal note may influence if a bill passes, if it fails, or if changes need to be made to the bill to adjust the cost or revenue.”

And, today, without this vital information, HF2 passed the State and Local Government Finance and Policy committee, the very committee tasked with overseeing — as the name indicates — state and local government finance.

HF2, remember, is a bill under which “as many as 400 new bureaucrats will be hired using an entirely new computer system: think MNLARS, or MNsure.” How can the committee charged with overseeing state and local government finance possibly vote on this bill without knowing what the financial consequences will be?

When a fiscal note finally did arrive in April, I noted that “the annual cost of the PFML program has ballooned from $781 million to $1 billion, an increase of 30% in one year,” and that even that was based on some very favorable assumptions. Nevertheless, the bill was passed into law in June.

Minnesota’s Department of Employment and Economic Development (DEED) commissioned Milliman, a “worldwide provider of actuarial and related products and services” to “perform an actuarial analysis of the Paid Family and Medical Leave (PFML) program established in Minnesota.” When it released its findings in October, I wrote that it found:

…significantly higher benefit and administrative costs than the state had estimated. In the first three years of the program, Milliman projects total PFML expenses of $4.42 billion – roughly $628 million more than state officials claimed while passing the bill.

As I’ve noted before, in these circumstances either the general fund covers the deficit, the regressive payroll tax gets hiked, or payouts are cut. Milliman finds that, to cover this forecast deficit in the PFML scheme’s finances, the payroll tax would need to be:  

Year 1: 0.70% 

Year 2: 0.92% (+31%) 

Year 3: 0.78% (+11%) 

Year 4: 0.86% (+23%) 

That works out at an increase of 23% in the burden of the regressive PFML payroll tax in just four years.

Which brings us to the present. Changes to the scheme proposed this session will, according to Milliman, require that first year figure to go up to 0.88%. The total amount of your payroll tax just went up by 25.7% in the first year before a dime has been paid out.

The DFL squashes debate on PFML tax hikes

A large part of the reason this scheme is turning into such a colossal, costly mess, is because the DFL is more concerned with passing it than with figuring out whether it works or not. That is why it sailed through all those committee hearings — including the State and Local Government Finance and Policy committee, remember, the very committee tasked with overseeing state and local government finance — without a fiscal note. It has always been a case of passing the bill and figuring out how we will pay for it all later.

The DFL demonstrated this again in the House late on Wednesday. As KSTP reports, “a bill making changes to Minnesota’s paid family and medical program that will increase taxes and the expense of the program” was being debated in the state House. Then:

Just after midnight Wednesday night into Thursday morning, DFL House Speaker Melissa Hortman had heard enough and abruptly called for a vote on the bill as dozens of Republicans were still waiting to speak.

“The clerk will take the roll on the bill,” she said calmly, catching Republicans off guard. Then there was an uproar.

“Excuse me what is happening here?!,” one lawmaker yelled, soon followed by others. “Madam Speaker, what’s going on? Madam Speaker! Madam Speaker! Point of order! Madam Speaker! You have just silenced the voice of the minority!”

…

“This is not how democracy is supposed to function,” said GOP Minority Leader Lisa Demuth. “Debate is essential to the legislative process. It’s a fundamental right that ensures all perspectives are heard and respected. Yet here we are.”

The record shows that what this proposal needs is more scrutiny, not less. Once again, democratic accountability takes a back seat to ramming this measure through, whatever the cost.