This week Senate Republicans proposed $2.73 billion to immediately pay off the state’s $1.2 billion in Unemployment Insurance (UI) debt and refill the fund to protect workers’ benefits. On January 1st, 2020, the UI Trust Fund balance was $1.7 billion but unemployment Insurance claims during the pandemic drained the fund to a negative balance of $1.2 billion in debt to the federal government.

Until Minnesota’s UI trust fund reaches a level of funding considered adequate by the federal government, Minnesota businesses will be penalized through higher federal taxes to increase the available funding. 

“Our small businesses and their workers have suffered enough over the pandemic,” Eichorn said. “We cannot afford to allow a massive tax increase to cripple the lifeblood of our economy. It is imperative we work together to solve this avoidable disaster.”  

Minnesota has accrued over $4 million in interest alone to the federal government on the debt. The $2.73 billion in appropriations from SF 2677 would pay off the debt and interest owed to the federal government and also replenish the trust fund to pre-pandemic levels. 

According to DEED, it would take nearly 10 years of additional higher taxes on businesses to replenish the UI trust funds in order to blink off additional taxes and end the federal government tax penalty. 

The state is currently paying about $70,000 a day on interest charges to the federal government for the loan.