Today, Senate Republicans passed legislation to stop devastating tax increases on small businesses that would also have put workers at risk and without resources for their needs if laid off. It also provides bonuses to frontline workers. The legislation resolves the differences between the Senate and House on repaying and refilling the Unemployment Insurance (UI) Trust Fund and providing bonuses to workers who worked the frontline during the COVID pandemic.

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, Minnesota borrowed money from the federal and Minnesota now owes more than $1.2 billion to the federal government.  

“Paying off Minnesota’s Unemployment Insurance debt is just good government,” Senator Mary Kiffmeyer (R-Big Lake) said. “Our small businesses are currently recovering from the pandemic and the last thing they need is an additional tax hike. If employers are required to pay higher taxes, then they will not have that money to hire employees and increase wages and benefits. By fully paying off the state’s Unemployment Insurance Trust Fund debt, we are protecting employees’ benefits and helping businesses survive.”

The agreement means $2.7 billion will be used to pay off the loan from the federal government and refill the UI trust fund to its necessary balance using primarily federal funds. This will protect employees’ benefits and help businesses survive.

Additionally, as part of the agreement, $500 million from the surplus will go to frontline workers at risk during the COVID pandemic. 

The third part of the agreement includes spending the remaining federal American Rescue Plan Act funds available to Minnesota for COVID with an agreement that the Legislature and the governor would agree to the proposals.