Minnesotans recently got another reminder that politicians are not great mathematicians. Another new government program — this time, Paid Family and Medical Leave, or PFML — will cost billions more than the state told us earlier this year.

An independent actuarial report found that PFML will cost over $600 million more in the first three years and as much as $2 billion more in the first decade than originally estimated. As a result, workers and small businesses will pay much higher taxes to fund the program than what the administration of Gov. Tim Walz claimed earlier this year.

Despite assurances from state officials that initial estimates were “doubly conservative,” the

Milliman report

found the PFML tax will jump 31% in the program’s second year and remain significantly higher than expected in perpetuity.

It seems “doubly conservative” meant lowballing the cost to make it an easier political sell.

Unfortunately, this would be no surprise. The National Federation of Independent Business, Minnesota’s leading small-business advocacy group,

repeatedly

warned

the PFML math wasn’t adding up.

The Walz administration failed to consider data from other states with similar programs and instead relied on an opaque federal government model that produced estimates which were wildly inconsistent with key figures from other state programs.

It was obvious from the details of the proposal that it would cost more than what the state claimed. Minnesota Democrats pushed one of the most expansive paid-leave programs in the country while claiming it could be paid for with the second-lowest PFML tax in the country.

The final program allows for 20 weeks off every year, one of the highest wage-replacement levels in the country, and a definition of “family” that allows people to use the program for anyone — familial relation or not — with whom they have “an expectation to provide care.” The opportunities for abuse are enormous.

Nevertheless, Gov. Walz and nearly all Democratic lawmakers pushed it forward over the objections from schools, municipalities, and the business community.

Only two DFLers — Rep. Gene Pelowski of Winona and Rep. Dave Lislegard of Virginia — had the courage to oppose this boondoggle. They deserve a lot of respect for doing their own homework and standing up to their party.

Unless lawmakers fix the program before it launches, we’ll all pay a much higher price.

The National Federation of Independent Business in Minnesota is proposing five simple reforms to rein in PFML costs and relieve the burden on small businesses before the program starts in 2026.

One is capping the PFML tax rate at 0.70% of FICA wages and eliminating administrative authority to increase the rate above that level. This is basic fiscal responsibility.

Two is reducing the annual-leave maximum from 20 weeks to 12 weeks plus two additional weeks for pregnancy and childbirth complications. This mirrors the Connecticut and Oregon programs.

Three, require the state to annually adjust the wage-replacement payment formula and cap to maintain a maximum payroll tax of 0.70%. This is how Delaware’s program works.

Four, make the program voluntary for employers with fewer than 50 employees. Key parts of Minnesota’s PFML law were not written with the smallest businesses in mind.

And five, if a qualifying small employer opts not to participate in the program, allow its employees to opt-in on the same terms as the law allows for independent contractors.

These reforms would put the program on a more-predictable path while guarding against exorbitant costs and higher taxes. They also would give small businesses the flexibility they need to survive and compete.

The PFML actuarial report should be a wake-up call. We hope Gov. Walz and Minnesota lawmakers answer it.

(John Reynolds is the Minnesota state director for the National Federation of Independent Business in St. Paul, which represents over 10,000 small businesses in Minnesota)