ST. PAUL – Legislation to repay Minnesota’s unemployment insurance trust fund deficit and reverse tax hikes employers in the state faced despite a $10 billion surplus has been enacted into law.
Rep. Lisa Demuth, R-Cold Spring, said she was pleased the House approved this bill (S.F. 2677), which provides $2.7 billion to fully repay the trust fund which was depleted with more people out of work during the pandemic.
“It is a relief see this legislation reach the finish line to spare our employers from suffering this unjust tax increase,” Demuth said. “They’ve faced so many added challenges the last couple of years and the last thing they needed was a tax increase through no fault of their own at a time the state has a historic surplus.”
Senate Republicans approved a clean bill to rectify this issue in February, with broad, bipartisan support. House Democrats delayed action until late April, when they added more than $1 billion in other funding to the bill. Demuth said this change complicated matters and delayed final approval, costing state taxpayers $50,000 in interest for every day the legislation languished.
Final language includes $500 million in payments to frontline workers – approximately $750 per person – and $190 million is provided to Minnesota Management & Budget for continued COVID-19 expenses. Another measure allows just one legislative body to reject an expenditure instead of the current requirement for both bodies to object.
“It was disappointing for the UI issue to remain unresolved for so long because the House majority added unrelated measures to the bill,” Demuth said. “Those other issues are wholly separate and should have been considered on their own merits. We could have put the UI tax increase to rest months ago, providing employers with certainty and eliminating a lot of needless accounting headaches and expenses.”
Approval of this bill replenishes the unemployment insurance trust fund, uses the state’s remaining federal American Rescue Plan funding and halts automatic payroll tax increases that kick in by default when the trust fund dips beneath required levels. The final package was widely supported, with a 124-5 House vote and near-unanimous passage in the Senate on Friday before Gov. Tim Walz enacted it the same day.
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