One of the many lingering effects of the pandemic is the damage done to Minnesota's once-brimming unemployment trust fund. The near complete shutdown of much of the state's economy during the depths of the pandemic sent unemployment levels soaring, exhausting the fund.

The state then started borrowing from the federal government, as many states did, to continue unemployment benefits. Now the $1 billion bill has come due.

Dozens of states in similar straits relied on federal pandemic relief to restore their unemployment funds, a use which was specifically allowed by the federal government. Minnesota was among a handful that did not, hoping instead that the feds might eventually forgive the outstanding debt. But House Majority Leader Ryan Winkler told an editorial writer that the state's recent news of a $7.7 billion projected surplus makes that option extremely unlikely.

Unless the Legislature takes action, the burden for replenishing the barren trust fund will fall on businesses still coping with labor issues, supply chain problems, nervous customers and the highest inflation rate in 40 years. Notices of the increases needed to rebuild the fund are already going out to businesses across the state, payable in the spring.

"We're one of only 10 states that still have outstanding debt," House Minority Leader Kurt Daudt told an editorial writer. "We're an outlier. Thirty-four states used their federal money. They didn't shove this cost onto their businesses. This is not just big businesses paying this increase. It's every business in the state."

Jonathan Weinhagen, president and CEO of the Minneapolis Regional Chamber of Commerce, told an editorial writer that one member who runs a child care center was notified this week that their increase would total $14,000 — well over $1,000 a month in unanticipated costs. "Businesses are planning their year right now," he said. "They're having to make decisions about staffing."

There's another debt the state owes — as we noted in a previous editorial — to send $250 million in "hero bonuses" to front-line COVID-19 workers. Legislators have fought for months over who should get the money and how much. A major sticking point has been GOP insistence on giving a "meaningful" amount to a smaller pool of eligible workers, while Democrats have pushed for a larger pool that would include grocery, retail, child care, meat-packing and other workers who risked daily exposure to perform work that could not be done remotely.

Winkler pointed out to an editorial writer that adding the higher amount Republicans want to the larger number Democrats prefer nets out to about $1 billion.

This has the potential to be a serious win-win. Minnesota is awash in surplus funds. Sending substantial bonuses (about $1,500) to about 650,000 of the hardest-working Minnesotans who took some of the biggest risks is an appropriate use of that money. So too is giving businesses what would amount to $1 billion of tax relief.

Winkler said that while the trust fund is paid into by employers and employees, "we recognize that some businesses, small businesses in particular, are struggling and should have some relief. But, if you are among those corporations who had a better year, I'm not super sympathetic. Not every business needs this level of relief."

That said, he told an editorial writer, "I believe a lot of Republicans want to help front-line workers. I know a lot of Democrats want to help small businesses. It shouldn't be hard to find agreement on this."

In a recent letter to Gov. Tim Walz and legislative leaders, Democratic U.S. House Rep. Dean Phillips also made the case for business relief, specifically for "industries [that] rely on in-person service or gatherings, including the hospitality, live events and fitness industries."

Phillips said he and his staff are in near-daily contact with "business owners who are taking on massive amounts of debt just to survive yet are still being forced to consider layoffs or even closure."

It's clear that there is bipartisan support for relief to help both businesses and workers. The state has the means and the knowledge that most of the money would quickly flow back into the economy.

All that remains now is the political will. "Everyone wants to support Main Street businesses, it seems," Weinhagen told an editorial writer. "Everyone wants to support essential workers. But of all the things we should be rolling up sleeves on and working together, it's a bit of a mystery to me why we haven't been able to figure this out."

A balanced approach to solving a mess
December 19, 2021 – Star Tribune Opinion
By Star Tribune Editorial Board