Veto sustained on unemployment insurance legislation – employers could see tax increase of $420 per employee

The impact of Gov. Nixon’s veto of House Bill 611 could cost Missouri employers far more than the tax cut lost by the defeat of the override of House Bill 253.  Gov. Nixon’s veto was sustained on a 107 to 54 vote in the Missouri House.  Employers could lose more than $850 million in Federal Unemployment Tax Act (FUTA) credits without the provisions in HB 611 that would keep Missouri compliant with federal mandates.  By next year, Missouri employers could be paying $420 per employee more for unemployment insurance coverage.

The mandates are required under the federal Trade Adjustment Extension Act of 2011.  The bill also contained language to broaden the definition of misconduct so that employees fired for infractions such as stealing from their employers or doing drugs on the job would be blocked from unemployment insurance benefits. 

“This veto is fiscally irresponsible,” said Mehan.  “Risking millions in state funding and rate increases on employers so that people who have no right to receive unemployment insurance benefits can continue to raid the system is infuriating.”

During the 2013 Legislative Session the Missouri Chamber received notification from the Missouri Department of Labor that employers would lose FUTA tax credits – $859 million annually — without passage of the mandates.  The state would also risk losing more than $50 million annually to fund administration of the unemployment compensation system and re-employment. 

In addition, non-compliance would jeopardize all federal funding for the Tile IV-D program –Temporary Assistance for Needy Families (TANF) program.

In August, the Missouri Chamber submitted a Sunshine Request to the Missouri Department of Labor requesting all correspondence the state had with the US Department of Labor in an effort to uncover the threat facing employers by falling out of federal compliance.  That information is still pending.

The Missouri Department of Labor has filed emergency and permanent rules in an attempt to bring Missouri in compliance with the mandates – a move the Missouri Chamber suggests goes beyond statutory authority.

“One lawsuit could put Missouri out of compliance.  Essentially Gov. Nixon is playing roulette with Missouri’s unemployment system,” Mehan said.

Missouri is the only state in the nation that has not taken legislative action on the required mandates.

The Missouri Chamber of Commerce and Industry (www.mochamber.com) was founded in 1923 and is the largest business organization in Missouri, representing almost 3,000 employers, providing more than 425,000 jobs for Missourians.

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About mochamber

The Missouri Chamber of Commerce and Industry understands that the quality of life in our state depends on quality jobs for Missourians. To that end, we have one simple mission: to protect and advance Missouri business.

One thought on “Veto sustained on unemployment insurance legislation – employers could see tax increase of $420 per employee

  1. Well. I think it’s not that great to have to see the employers increase taxes specially in this state of time. And I think as what they said, the vero is definitely irresponsible and risking money in the state funding.

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