In another sign of the improving economy, Minnesota's fund to provide benefits to the unemployed has recovered enough to trigger a drop in the unemployment insurance taxes paid by businesses. The Associated Press reported the decrease will start next year.
The Minnesota Department of Employment and Economic Development said that Minnesota businesses pay unemployment insurance taxes on the first $29,000 of annual wages per employee. Starting Jan. 1, the base tax rate will drop from 0.5 percent to 0.1 percent.
The Star Tribune reported that 120,000 Minnesota businesses will save $346.5 million over two years because of the rate reduction.
The unemployment insurance trust fund's reserve at the end of September was up to $1.2 billion, enough to trigger a tax cut enacted by the Legislature this year. The fund had previously dropped into deficit due to the recession when more laid-off workers relied on the benefits.
At the same time, MPR reported earlier this month that property taxes will increase next year at city, county, township and school district levels. The Minnesota Department of Revenue released a list of preliminary maximum property tax levies showing the hikes. Those local governments set final levies for 2014 property taxes by Dec. 27.
Governor Mark Dayton said the preliminary increases are still smaller than they’ve been in several years. Dayton and DFL lawmakers were counting on decreases in those taxes.