Minnesota leaders strike deal on unemployment insurance, frontline worker pay

Minnesota leaders struck a multibillion-dollar deal Wednesday night that aims to stave off tax hikes on state businesses while sending direct checks to workers on the front lines of the pandemic.

The tentative pact includes $500 million for workers such as nurses, longterm care employees and others who continued to work in person at the height of the pandemic, as well as $2.7 billion to refill the state's Unemployment Insurance Trust Fund.

"I am proud of this bipartisan agreement to provide hazard pay to frontline workers and relief for small-businesses owners, both of whom sacrificed a great deal during the pandemic to keep their communities safe and our economy strong," DFL Gov. Tim Walz said in a statement.

The trust fund was drained by a historic level of requests during COVID-related lockdowns, and businesses face a Saturday deadline to pay millions in payroll taxes to start refilling the fund. Roughly 667,000 workers are eligible to apply for the bonus checks, which would amount to roughly $750 per person if all of those who qualify apply.

The deal, which leaders announced Thursday morning, comes after months of negotiations in the divided Legislature over how to help Minnesotans hit hardest by the effects of the pandemic.

"We have reached an agreement in principle, at least a verbal agreement," said GOP Senate Majority Leader Jeremy Miller, who said the gridlock was broken after "ongoing conversations and a better understanding of where all of the parties were at and the importance of UI and frontline workers."

Miller said the agreement called for unspent federal American Rescue Plan dollars to help pay for the deal.

In addition to replenishing the unemployment insurance trust fund and sending payments to workers, the deal designates $190 million from the general fund for Walz to spend on managing COVID-19, DFL House Speaker Melissa Hortman said.

The House and Senate were moving toward resolution Thursday night. Miller said he anticipated the plan will land on Walz's desk Friday.

Lawmakers agreed in last year's budget to send $250 million to frontline workers, but the two sides disagreed about who should be eligible. Republicans favored a narrow pool of nurses and longterm care workers. With a nearly $9.3 billion budget surplus this year, Democrats had been pushing to increase the total to $1 billion to include a broader group of workers who would get $1,500 checks.

"I don't understand how Senate Republicans could say that: 'After COVID-19 we want to give businesses $2.7 billion ... but we're unwilling to understand what workers went through,'" said Hortman. "But we had to eventually decide whether frontline workers were going to get a bonus or there would be a risk of nothing."

It could take months for the state to set up a system to receive applications and start sending out checks to workers.

Minnesota Chamber of Commerce President and CEO Doug Loon called the agreement "long-overdue news." Businesses have long been lobbying legislators to act to avoid tax increases.

"Economic recovery cannot wait for partisan politics, and employers face real challenges now, including historic inflation and worker shortages," Loon said in a statement.

The deal leaves roughly $6 billion of the surplus on the table for legislators to debate how to spend in the three weeks remaining in the 2022 legislative session. Lawmakers are also debating whether to cut taxes, boost spending on classrooms and pump resources into combating rising crime. The deadline to adjourn is May 23.