Deadline looms to avoid unemployment tax increase on businesses

Senate Republicans, DFL Gov. Tim Walz and the Minnesota Chamber of Commerce are all on the same page when it comes to an unemployment insurance trust fund issue that threatens to result in major tax increases on Minnesota businesses.

“If we don’t refill the fund, it’s not going to be there in a stable and reliable fashion for Minnesota workers if we happen to see another downturn,” Sen. Eric Pratt, R-Prior Lake, said at a State Capitol news conference. “The Senate passed this bill with strong bipartisan support, 55-11. Two-thirds of Democrats in the Senate voted for this bill. We passed it three weeks ago, and it’s time that the House step up and do their job.”

At issue is about $1.2 billion needed to repay the federal government for covering state unemployment payments during the pandemic after the state’s unemployment trust fund ran out of money. The state needs to repay that and put another roughly $1.5 billion into the trust fund in case there’s another economic downturn.

“We have five days until House Democrats go over the cliff and raise taxes on every employer in the state of Minnesota at a time when the government is sitting on $10 billion of Minnesotans’ money,” says Rep. Anne Neu Brindley, R-North Branch.

DFL House Speaker Melissa Hortman sent a letter to Walz and Republican leaders on Thursday saying she’s willing to negotiate but disputing the March 15 deadline. She says any money for unemployment insurance will have to be coupled with approval of pandemic pay bonuses for frontline workers.

“In the spirit of compromise, House Democrats stand willing to negotiate both issues expeditiously,” Hortman wrote. “Frontline workers deserve their overdue bonus payments now. Working together, we can prevent significant unemployment insurance payment increases for businesses before they occur on April 30^th.”

Gov. Walz met with both House and Senate leaders this week unsuccessfully trying to reach a compromise.