PIERRE, S.D. (KELO) — Nearly every business eligible to pay unemployment tax in South Dakota could face a quadrupling of the administrative fee on wages that the state Department of Labor and Regulation is already charging them.
State Labor Secretary Marcia Hultman sketched out the proposal on Wednesday to the South Dakota Reemployment Assistance Council.
She said legislation was being drafted for state lawmakers to consider in the 2025 session that starts on January 14.
The administrative fee would rise to .08% from the current .02%. New businesses would be exempt.
In return for the $3 million increase, unemployment tax contributions that businesses pay would be reduced across the board by $3 million.
Hultman and Emily Ward, the department’s finance director, told the council that the department’s unemployment insurance grant and administration fund would soon run short, while the reemployment trust fund itself remains healthy.
Ward said that projections show the grant and administration fund would finish more than $1.3 million in the red in fiscal 2026 and go nearly $3.8 million in the hole in fiscal 2027, as a federal stimulus grant is exhausted while various expenses for the cost of living raises, technology services, postage and other categories have been rising.
Some council members hesitated on Wednesday when Hultman asked for an endorsement of the concept of raising the administrative fee to .08%.
She in turn said a special meeting of the council would be called in the coming weeks so that members could view the draft version of the legislation and offer their opinions.
The Legislature approved an $18 million decrease in unemployment tax contributions two years ago.
On Wednesday, Hultman presented reemployment trust fund projections suggesting that the 2023 reduced tax-rate schedule can stay in place for another year.
