Provide for the revision and eventual repeal of the employer's investment in South Dakota's future fee.
Summary
HB1186 revises South Dakota’s employer “investment in South Dakota’s future” fee, which is part of the state unemployment compensation framework. The bill keeps the fee in place for employers subject to unemployment contributions, but updates the rate schedule for experience-rated employers and preserves the existing rules governing how the fee is collected, credited, and deposited. It also continues the prohibition on employers deducting the fee from employee wages.
The bill further sets a sunset date by repealing the underlying statute on July 1, 2026. In effect, it would move the fee toward eventual elimination while leaving the current collection structure intact until that repeal date. The measure is framed as a revision and eventual repeal rather than an immediate termination of the assessment.
Impact
HB1186 would amend § 61-5-29 in the unemployment insurance statutes, affecting employers that pay unemployment contributions and, in some cases, reimburse the trust fund for benefits paid in lieu of contributions. It changes the employer investment fee rate schedule for experience-rated employers and maintains the existing administrative treatment of the fee, including deposit into the unemployment compensation clearing account and then into the employer’s investment fund. The bill also repeals the statute effective July 1, 2026, which would remove the legal basis for the fee after that date.
Sentiment
The voting history suggests mixed but not overwhelming support. The bill received a 9-2 do pass recommendation in committee, indicating favorable consideration at that stage, but later floor votes show it did not secure broad enough support, with a 32-38 do pass vote and a subsequent reconsideration vote of 32-36. That pattern suggests the proposal was seriously considered but remained controversial or at least insufficiently supported to advance comfortably.
Contention
The main point of contention appears to be whether the employer investment fee should be revised and scheduled for repeal at all. Supporters likely viewed the bill as a step toward reducing or eliminating an employer assessment tied to unemployment insurance, while opponents may have been concerned about the effect on funding streams associated with the unemployment compensation system and the employer investment fund. The close floor votes indicate disagreement over the fiscal and policy implications for employers, the unemployment system, and the state’s broader workforce funding structure.