Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.
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It took far too long, but the Minnesota Legislature finally achieved a deal that will fully replenish the Unemployment Insurance Trust Fund (UI) while also doubling front-line worker bonus amounts brokered in an earlier agreement.
Gov. Tim Walz marked the occasion with a ceremonial bill signing on Monday after a Friday signing that put the bill into law. Not every bill gets a ceremonial signing, but this one is worth celebrating. Some 130,000 businesses of every size and type across the state will see $2.7 billion in tax relief from this bill, mainly by sparing them the sudden and in some cases sharp increases in UI fund contributions.
Business owners were about to take a double hit from the pandemic. The state shut down many of them, triggering mass layoffs that sent unemployment levels soaring. Minnesota's fund, which had a healthy balance pre-pandemic, was sent into a shortfall, forcing the state to borrow from the feds. As part of pandemic relief, the federal government allowed some pandemic relief funds to restore state unemployment funds and send bonuses to essential workers who showed up for work that could not be done remotely.
Most states availed themselves of this option earlier. In Minnesota, the DFL House pushed hard for $1 billion in worker bonuses and attempted to limit business tax relief on unemployment to the same amount. The GOP Senate clung to an earlier agreement of $250 million in worker bonuses reached in 2021 before the last wave of federal relief and a larger-than-anticipated state surplus, but it insisted on a complete restoration of the trust fund.
Such protracted negotiations are common in divided government as opposing sides struggle to reach an agreement. But in this instance, talks first blew past a deadline in March for setting new rates, then past an even more critical deadline of April 30, when the first-quarter UI taxes came due. The Department of Employment and Economic Development must recalculate new amounts for UI business taxes, send them out and reimburse those that wound up overpaying. Walz hastily signed the deal on Friday because DEED could not legally start that process until it became law.
"Minnesota businesses, especially small businesses and their workers, were deeply impacted by COVID-19," DEED Commissioner Steve Grove said at Monday's signing. "This investment means we won't have to raise future UI tax rates right at this critical moment of expansion for Minnesota's economy." Avoiding those higher tax payments, he said, would free up money for business owners to put toward salaries, benefits and capital expenses as they make their way through the recovery.
