Friends and neighbors,
The COVID-19 pandemic hit businesses hard and left millions of Americans unemployed. Unemployment Insurance (UI) checks served as an essential resource to workers and helped weather the economic downfall.
On Jan. 1, 2020, Minnesota’s UI trust fund balance was $1.7 billion. However, the many people claiming unemployment during the pandemic greatly drew down the UI trust fund to the point where it hit zero. As a temporary solution, our state borrowed money from the federal government resulting in a negative balance of $1.2 billion in debt.
Paying off this debt is key as our state is currently paying over $50,000 a day on interest charges to the federal government for the loan. Last year, we tried to get Governor Walz to repay the federal government with the federal emergency assistance funding Minnesota received, which our state was eligible to do. It is very frustrating that the governor knew this back then and our state has continued to incur more debt since.
Now, Governor Walz is looking to do this at end of session in May. However, it is critical we get this done before March 15 when two surcharge tax increases would take effect.
Therefore, the Senate put forward a $2.73 billion proposal, SF 2677, this session to immediately pay off the state’s $1.2 billion in UI debt. This bill would also replenish the trust fund to sufficient and protect employees’ benefits.
Employees do not pay into the unemployment insurance fund. This is paid by the employer and is a special charge that goes on every paycheck. Therefore, until Minnesota’s UI trust fund reaches a level of funding considered adequate by the federal government, our state’s businesses will be penalized through higher federal taxes to increase the available funding.
According to the Minnesota Department of Employment and Economic Development, it would take more than 10 years of additional higher taxes on businesses to replenish the UI trust funds to blink off additional taxes and end the federal government tax penalty. If employers are required to pay higher taxes, then they will not have that money to hire employees and increase their wages and benefits. Big businesses can absorb this expense, but Minnesota’s small businesses are already struggling due to the pandemic. This would only force more small business to close.
SF 2677 was recently heard in the Senate Committee on Finance, where I voted ‘Yes.’ Paying off Minnesota’s UI debt is just good government. Our businesses and employees need this done. Everyday this continues to be delayed our state owes over $50,000 daily on interest charges. This is an issue that must be addressed immediately and one that I will continue push for this legislative session.
Contact me
As always, if have questions or concerns on this or any legislative topic, feel free to contact me any time. You can call me at 651-296-5655 or send me an email at sen.mary.kiffmeyer@senate.mn. It is a privilege to serve as your state senator.
Sincerely,
Mary