Today 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 employees’ benefits.  

On January 1st, 2020, the UI Trust Fund balance was $1.7 billion. Unemployment Insurance claims during the pandemic drained the fund to a negative balance of $1.2 billion in debt to the federal government. Every dollar from the UI trust fund went directly to employees. Minnesota has accrued over $8 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 sufficient levels. The state is currently paying over $50,000 a day on interest charges to the federal government for the loan.  

“Our businesses were told they would not be held accountable for dipping into this fund to keep their employees on the payroll, yet main street businesses across the state are finding themselves footing this massive bill in the form of taxes,” said Senator Carrie Ruud (R-Breezy Point). “The UI fund was always meant to be a benefit for employees, and a risk-free option for small business owners. Yet somehow, the State has been carrying this balance far longer than necessary and now the cost is being passed onto business and consumers. Minnesota needs to do what other states have already done—it’s time to pay the bill, uphold our promise to businesses, and protect a critical employee benefit.”

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