Looming deadline puts focus back on unemployment fund
Updated: 6:15 p.m.
Attention is returning to a legislative stalemate around a shortfall in Minnesota’s unemployment insurance trust fund and efforts to replenish the account while holding businesses harmless.
Employers are approaching an April 30 deadline to pay first quarter unemployment taxes. Some already have paid their tax at a higher rate than before.
Virtually all businesses faced additional assessments to repay a $1.4 billion federal loan and refill the account drawn on heavily during the COVID-19 pandemic.
Lawmakers haven’t agreed on a fix to head off the tax hikes.
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Business leaders made the rounds at the Capitol on Wednesday to keep the pressure up.
“On the 30th, these bills are due,” said Doug Loon, president of the Minnesota Chamber of Commerce. “Prospectively, it can be fixed, but it’s very hard as I understand it to claw back after the bills have been paid.”
House Speaker Speaker Melissa Hortman, DFL-Brooklyn Park, said Tuesday that a workaround is possible short of a $2.7 billion plan approved by the Republican-led Senate.
“That is not necessary to hold down rates. Here at the Minnesota Legislature we can dictate that the rates will be frozen. There won't be a rate increase,” she said. “But we do not have to put $2.7 billion into the account to accomplish that freeze in rates.”
Hortman said putting $1.8 billion toward the fund would retire the federal debt and provide a cushion to pay future jobless benefits. She said a law change could reverse the tax increase.
Under current law, businesses that already paid their taxes would be in line for credits for the excess amount sent in if the rates are reduced.
The Department of Employment and Economic Development said through a spokesperson that 60,000 employers — about half of the total in the state — have submitted their first-quarter wage information already; some have paid their applicable tax. The agency statement said “while the Legislature could pass a bill to modify the assessments, the governor’s budget offers the best approach to ensure that the UI Trust Fund is in a stronger financial position to be able to support workers in the future.”
DFL Gov. Tim Walz and Republicans in the Legislature proposed spending $2.7 billion to relieve the tax pressure.
House Minority Leader Kurt Daudt, R-Zimmerman, dismissed the latest House plan.
“Democrats are trying to find some creative solution to weasel out of living up to their commitment that businesses were going to be held harmless for the shutdowns that were imposed on them by our governor during COVID,” Daudt said.
Senate Majority Leader Jeremy Miller, R-Winona, also said the proposal to devote less to the fund won’t work.
“We're open to alternatives if there are any, but it sounds like there really aren't any alternatives,” Miller said Tuesday. “It's $2.7 billion otherwise small businesses will see a tax increase.”
House Democrats haven’t brought an unemployment fix to a vote. They say it should move in tandem with an adequate bill to reward workers who were on the front lines during COVID-19. That measure hasn’t cleared the Senate.
At an event at a Minneapolis grocery store on Wednesday, Walz said there’s no reason for keeping both issues unresolved. He said he will propose a potential compromise in the coming days.
“It’s unacceptable that the unemployment trust fund has not been refilled and it’s unacceptable that front-line workers hero pay bonuses have not been done,” Walz said. “This should have been the easiest deal in Minnesota political history.”
MPR News reporter Tim Pugmire contributed to this story.