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Minnesota senators OK $2.7B plan to replenish jobless fund, prevent tax hikes

The proposal would use federal COVID-19 relief fund and state surplus dollars to repay the federal government and to put money into the state's unemployment insurance trust fund.

Sen. Eric Pratt, UI Trust Fun
Minnesota Sen. Eric Pratt, along with other lawmakers and business leaders on Monday, Feb. 7, 2022, speaks to reporters at the Capitol about a $2.73 billion plan to repay the federal government and replenish the state's unemployment trust fund.
Dana Ferguson / Forum News Service
We are part of The Trust Project.

ST. PAUL — Minnesota senators on Monday, Feb. 14, pushed forward a plan to spend $2.7 billion to repay the federal government and replenish the state's unemployment insurance trust fund to avoid a tax increase for business owners.

The Senate on a 55-11 vote to advance the plan to pay back the federal government more than $1 billion for unemployment funds and to bring the fund's total up to $1.3 billion. Lawmakers face a March 15 deadline to pass a policy resolving the issue if they want to prevent tax assessments from taking effect in April.

The push to refill the trust fund comes after an unprecedented number of Minnesotans pulled down jobless benefits in 2020 and 2021 due to the COVID-19 pandemic and state efforts to manage it. Roughly one in five Minnesota workers applied for unemployment insurance since March of 2020, per the Minnesota Department of Employment and Economic Development, and 873,707 employees got at least one unemployment check. Since that time, the department sent out roughly $15 billion to Minnesotans out of work.

The bill's supporters said it was critical to keep money in the fund in case Minnesota workers lost their jobs and needed financial help. And they said business owners shouldn't face a tax hike after they'd paid into the fund throughout the pandemic.

"It's downright inconceivable to consider this kind of burden at a time when the state is using $2.3 billion in federal money and about $400 million in state money while employers are struggling to recover from the pandemic and to keep their doors open," Sen. Eric Pratt, R-Prior Lake, said. "This is about helping small businesses recover from the pandemic and the executive orders that helped exacerbate it. Every dollar that was paid out of that trust fund went to an unemployed Minnesotan, not a single dollar went to business and yet we're asking them to pick up the cost."

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Opponents on the floor said large corporations would see a benefit as a result of passing the $2.7 billion plan and they said the state should prioritize supporting small businesses and workers instead. Democrats attempted to amend the bill on the floor to include $1 billion to be sent out to front-line workers that remained on the job during the pandemic and to make paraprofessionals in Minnesota schools eligible to receive unemployment insurance. But Senate President Dave Osmek, R-Mound, ruled that those additions weren't germane to the subject of the bill.

"While $7.7 billion is a lot of money, there's a lot of struggle and I don't know that $7.7 billion is going to make it all go away," Sen. Erin Murphy, DFL-St. Paul, said. "The decision by the majority today to put $2.7 billion into replenishing the UI fund and forgiving large businesses and small businesses of their obligation I think is a statement of priority. ... We made a promise to front-line workers and they are still waiting. A $1,500 check into the pockets of workers would be good for them, their families, their communities and our economy."

The DFL lawmakers said they would continue to push a plan to get hero checks out to front-line workers. Lawmakers last year set out $250 million to send out to the workers but have since been unable to agree on who should qualify for the funds.

Leaders at the Minnesota Chamber of Commerce on Monday lauded the Senate's quick passage of the bill and urged House lawmakers to advance it soon. Democrats in the House of Representatives have said they'd seek to pair the plan with a proposal to send out $1 billion in checks to front-line workers that remained on the job during the pandemic. They've also put forward other options to repay the federal government and to partially replenish the unemployment trust fund.

Democratic Gov. Tim Walz has said he supports the $2.7 billion plan to repay the federal government and replenish the trust fund.

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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