Make a deal to help businesses, workers

Faced with a fast-moving pandemic, Minnesota took unprecedented action early in 2020: It closed businesses across the state in an attempt to slow the onslaught of the coronavirus.

Hundreds of thousands of Minnesotans were thrown out of work as businesses across the state locked down. Unemployment soared into double digits, with one in five workers filing claims.

To help those newly unemployed, the federal government offered enhanced unemployment protections that extended the time funds could be collected as well as the amount. The lockdown was extraordinary, but so too was the threat posed by a virus that at that point had no vaccine and no treatment. Only essential services were allowed to continue to function, as one business after another shuttered to comply with the state lockdown that would stretch far longer than anticipated.

Now businesses are facing a double whammy. Unless a divided Legislature can reach swift agreement on a package that would restore the state's Unemployment Trust Fund, businesses will be billed for $2.7 billion in higher fees to fully replenish the fund, starting March 15.

This is a situation that has lingered far too long when the solution is obvious. Minnesota is among just a handful of states that have failed to use their federal pandemic aid to restore the unemployment fund. Some 31 states have already done so, and such a restoration is among the allowable uses of pandemic funds. Gov. Tim Walz has pushed to get the $2.7 billion allocated. So has the Senate GOP caucus and House Republicans.

The lone holdout among the top players is the House DFL.

House Speaker Melissa Hortman told an editorial writer that House Democrats seek a dollar-for-dollar deal that would provide more than $1 billion for expanded pandemic "hero bonuses" that would broaden payouts beyond health workers and first responders to grocery clerks, meatpackers and others who risked their health to work through the pandemic.

Hortman said Democrats would then offer the same amount to the trust fund. That would be enough to repay the state's federal loan, but not enough to bring it back to health, which requires the full $2.7 billion. That remaining amount, she said, should wait till negotiators can determine whether that is the best use of relief funds. "We are willing to help businesses, but we need a corresponding willingness on the part of Republicans to help workers," she said, noting that money won't technically be owed until April 30.

But businesses must make plans. Small- and midsize companies in particular are already counting every dollar in the wake of historic losses and continue to battle supply chain and labor issues. In testifying against the House DFL proposal in committee, state Department of Employment and Economic Development Commissioner Steve Grove also noted that a DFL suggestion that would cancel rate increases only for small- and midsize businesses was not feasible. "You can't target particular businesses by size or industry," Grove said. "We're not given that leeway. No state is."

Doug Loon, president of the Minnesota Chamber of Commerce, told an editorial writer that with a surplus of more than $9 billion and $1 billion in federal relief funds, "How is it possible that the state might raise $2.7 billion in taxes on businesses across the state? Other states have figured this out, with equally challenging political dynamics and most of them don't even have the surplus we're carrying. If this happens, it will hurt our entire economy."

House Deputy Minority Leader Rep. Ann Neu-Brindley, R-North Branch, told an editorial writer that "since we are so deep in the hole these businesses are being hit with huge, maximum tax increases, well beyond normal. That's why you saw bipartisan action in the Senate, with Senate Democrats voting largely in favor. That's why the governor and his administration support getting this done."

Walz has expressed strong support for the full $2.7 billion, in large measure because this was an event beyond any business' control and done to comply with a state order.

Hitting businesses with a protracted lockdown followed by an obligation to replenish an exhausted unemployment fund is unfair and could have ramifications for the state's economy as a whole.

As argued in a December editorial, the best compromise is to restore the fund and pay bonuses to the workers who risked so much to ensure others could continue to buy groceries, medicine, gasoline and other life essentials. Republicans should come to the table with an offer that includes the expanded pool of workers. And House Democrats should shield the many businesses in their districts from increases that may affect their margins for survival.

Yes, it is a substantial chunk of money. But there is a reason states received so much federal aid during the pandemic. There is already a move underfoot in Congress to claw back unused pandemic funds from state and local governments to allocate to other purposes. A last-minute deal averted that for now, but it remains a possibility.

This is a potential win-win for businesses and workers alike. Those don't come along very often, and Minnesota shouldn't blow the opportunity.