Today the Senate passed a $2.73 billion bill to immediately pay off the state’s $1.2 billion Unemployment Insurance (UI) debt and refill the fund to protect workers’ benefits. 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. 

“Now is the time to act swiftly to protect our small businesses and their workers from massive tax increases,” Westrom said. “Our job creators have suffered enough from COVID lockdowns and supply chain issues. We must responsibly pay off our debts and protect our main street businesses from catastrophe.”  

On January 1st, 2020, the Minnesota 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.

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-to help Minnesota get back on the right track again.

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. In total, the tax increases would amount to thousands of dollars more in taxes every year for many Minnesota small businesses if this doesn’t get paid back now.

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

The bill now awaits action by the House of Representatives. The Democrat-led House has tied their slimmer UI relief bill to a series of unrelated items which has so far slowed down the process.