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'Absolutely ridiculous': Walz presses Minnesota lawmakers reach deal, end payroll tax hike

The governor on Wednesday slammed legislative leaders for failing to reach an agreement when the state had a $9.25 billion budget surplus to resolve some of its top issues.

Gov. Tim Walz - Walz checks
Gov. Tim Walz and Lt. Gov. Peggy Flanagan on Thursday, March 17, 2022, speaks to journalists outside a Holiday gas station in New Hope, Minnesota, about his supplemental budget plan.
Dana Ferguson / Forum News Service
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ST. PAUL — Minnesota Gov. Tim Walz on Wednesday, April 20, slammed leaders in the divided Legislature for failing to reach a deal to repay the state's jobless insurance fund and to send out checks to front-line workers that stayed on the job during the pandemic and he urged them to return to negotiations.

Lawmakers in March missed a deadline to repay the federal government $1 billion for sending Minnesota resources to help those who were out of a job during the pandemic. They also disagreed on how much the state should spend to replenish the jobless fund. That triggered double-digit rate increases for some Minnesota businesses.

Those who have yet to pay will see the taxes come due at the end of April. That is unless the Legislature can step in and replenish the fund to block the tax hike.

With a $9.25 billion budget surplus, repaying the fund and tackling other top issues like sending direct payments to Minnesotans, compensating front-line workers and boosting public safety funding should be easy, Walz told reporters on Wednesday. The first-term governor at an unrelated news conference said it was "absolutely ridiculous" that the Legislature had not yet resolved the issue around the unemployment fund and urged lawmakers to quickly strike an agreement.

"The pace of meetings and the pace of work needs to pick up," Walz told reporters at a Minneapolis grocery store. He was there to pitch his plan to send $500 payments out to Minnesotans who make below a certain income threshold. "This should have been the easiest deal in Minnesota political history."

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The Senate in February advanced a $2.7 billion plan to repay the federal government the $1 billion and to replenish the fund to prevent a tax hike for Minnesota employers. Walz also supported that plan. But the House countered with a less expensive proposal that would repay the federal government but not fully replenish the state’s fund.

Democrats who control the Minnesota House said they would support the plan to replenish the jobless fund, but only if it came with a $1 billion plan to send out $1,500 checks out to front-line workers who stayed on the job during the pandemic. Senate leaders have said they’re not interested in the plan.

The impasse has frustrated business owners, some of whom have automatic payment systems that have already paid the higher tax rates. Dozens of business leaders from around the state met at the Capitol on Wednesday to share their stories with lawmakers and to press them to replenish the fund before the April 30 deadline.

"We're calling on the governor and the legislative leaders and the entire bodies of both sides to come together to fix this immediately," Minnesota Chamber of Commerce President and CEO Doug Loon told reporters. "Minnesota is an outlier. The state needs to be competitive. If we don't fix this, Minnesota businesses are at a disadvantage."

Frank Soukup, marketing director at Grand View Lodge in Nisswa, Minnesota, said the tax hike amounted to about a 15% increase for the resort that employs 850 people during the summer months. And that posed a significant blow for an industry that was already hit hard by the COVID-19 pandemic.

"The hospitality industry has been devastated over the last couple of years with hotels and restaurants and everything else, so anything we can do to help those sectors start to rise back up is going to help everybody help. I mean, it's a lot of jobs in our local community," Soukup said.

Walz said he planned to share a compromise proposal during his State of the State address on Sunday, April 24, that he thought could appease both sides of the divided Statehouse. House Speaker Melissa Hortman, DFL-Brooklyn Park, and Senate Majority Leader Jeremy Miller, R-Winona, on Tuesday, told Minnesota Public Radio that they thought negotiations would continue later this week.

MORE FROM DANA FERGUSON:
Several incumbent state legislators, particularly in the Senate, edged out competitors with more extreme views on COVID-19, election security and more.

Follow Dana Ferguson on Twitter  @bydanaferguson , call 651-290-0707 or email  dferguson@forumcomm.com.

Dana Ferguson is a Minnesota Capitol Correspondent for Forum News Service. Ferguson has covered state government and political stories since she joined the news service in 2018, reporting on the state's response to the COVID-19 pandemic, the divided Statehouse and the 2020 election.
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